SP Plus Corp (Form: 10-Q, Received: 08/01/2019 16:13:32)

false--12-31Q22019000105926200000P15Y9M18DP6YP12Y4M24DP5Y500000500000000000.0010.001500000005000000022783976228794092278397622879409P4Y00.010.015000000500000000P6MP1YP1YP1YP1Y03051837268990 0001059262 2019-01-01 2019-06-30 0001059262 2019-07-31 0001059262 2019-06-30 0001059262 2018-12-31 0001059262 sp:ManagementTypeContractsMember 2019-04-01 2019-06-30 0001059262 sp:ManagementTypeContractsMember 2018-01-01 2018-06-30 0001059262 sp:ReimbursedManagementTypeContractMember 2019-04-01 2019-06-30 0001059262 2018-01-01 2018-06-30 0001059262 sp:LeaseTypeContractsMember 2019-04-01 2019-06-30 0001059262 2019-04-01 2019-06-30 0001059262 sp:LeaseTypeContractsMember 2019-01-01 2019-06-30 0001059262 2018-04-01 2018-06-30 0001059262 sp:LeaseAndManagementTypeContractsMember 2019-04-01 2019-06-30 0001059262 sp:LeaseTypeContractsMember 2018-04-01 2018-06-30 0001059262 sp:ReimbursedManagementTypeContractMember 2019-01-01 2019-06-30 0001059262 sp:ManagementTypeContractsMember 2018-04-01 2018-06-30 0001059262 sp:ManagementTypeContractsMember 2019-01-01 2019-06-30 0001059262 sp:ReimbursedManagementTypeContractMember 2018-04-01 2018-06-30 0001059262 sp:LeaseTypeContractsMember 2018-01-01 2018-06-30 0001059262 sp:ReimbursedManagementTypeContractMember 2018-01-01 2018-06-30 0001059262 sp:LeaseAndManagementTypeContractsMember 2018-01-01 2018-06-30 0001059262 sp:LeaseAndManagementTypeContractsMember 2019-01-01 2019-06-30 0001059262 sp:LeaseAndManagementTypeContractsMember 2018-04-01 2018-06-30 0001059262 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0001059262 us-gaap:NoncontrollingInterestMember 2018-03-31 0001059262 2018-01-01 2018-03-31 0001059262 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0001059262 us-gaap:NoncontrollingInterestMember 2017-12-31 0001059262 2018-06-30 0001059262 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001059262 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001059262 us-gaap:TreasuryStockMember 2018-06-30 0001059262 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001059262 us-gaap:NoncontrollingInterestMember 2018-04-01 2018-06-30 0001059262 us-gaap:NoncontrollingInterestMember 2018-06-30 0001059262 us-gaap:CommonStockMember 2017-12-31 0001059262 2017-12-31 0001059262 us-gaap:RetainedEarningsMember 2018-06-30 0001059262 us-gaap:CommonStockMember 2018-06-30 0001059262 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0001059262 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0001059262 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0001059262 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0001059262 2018-03-31 0001059262 us-gaap:CommonStockMember 2018-03-31 0001059262 us-gaap:RetainedEarningsMember 2018-03-31 0001059262 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0001059262 us-gaap:NoncontrollingInterestMember 2018-01-01 2018-03-31 0001059262 us-gaap:TreasuryStockMember 2017-12-31 0001059262 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001059262 us-gaap:RetainedEarningsMember 2017-12-31 0001059262 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0001059262 us-gaap:TreasuryStockMember 2018-03-31 0001059262 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001059262 2019-01-01 2019-03-31 0001059262 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0001059262 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001059262 us-gaap:TreasuryStockMember 2019-01-01 2019-03-31 0001059262 us-gaap:RetainedEarningsMember 2019-03-31 0001059262 us-gaap:CommonStockMember 2018-12-31 0001059262 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001059262 us-gaap:RetainedEarningsMember 2019-06-30 0001059262 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0001059262 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0001059262 us-gaap:NoncontrollingInterestMember 2019-06-30 0001059262 us-gaap:TreasuryStockMember 2019-03-31 0001059262 us-gaap:CommonStockMember 2019-03-31 0001059262 us-gaap:CommonStockMember 2019-06-30 0001059262 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001059262 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001059262 us-gaap:NoncontrollingInterestMember 2019-04-01 2019-06-30 0001059262 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001059262 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001059262 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001059262 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0001059262 us-gaap:NoncontrollingInterestMember 2018-12-31 0001059262 us-gaap:TreasuryStockMember 2019-06-30 0001059262 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001059262 2019-03-31 0001059262 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001059262 us-gaap:TreasuryStockMember 2018-12-31 0001059262 us-gaap:TreasuryStockMember 2019-04-01 2019-06-30 0001059262 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001059262 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001059262 us-gaap:RetainedEarningsMember 2018-12-31 0001059262 us-gaap:NoncontrollingInterestMember 2019-03-31 0001059262 srt:ScenarioPreviouslyReportedMember 2019-06-30 0001059262 us-gaap:AccountingStandardsUpdate201602Member 2019-06-30 0001059262 us-gaap:AccountingStandardsUpdate201602Member sp:ImpactofAdoptionIncreaseDecreaseMember 2019-06-30 0001059262 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-01-01 2019-06-30 0001059262 sp:ParkmobileLLCMember 2014-10-01 2014-10-31 0001059262 us-gaap:DiscontinuedOperationsDisposedOfBySaleMember sp:ParkmobileMember 2018-01-03 0001059262 us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-01-01 2019-06-30 0001059262 us-gaap:DiscontinuedOperationsDisposedOfBySaleMember sp:ParkmobileMember 2018-01-01 2018-03-31 0001059262 us-gaap:CostOfSalesMember 2019-01-01 2019-06-30 0001059262 us-gaap:CostOfSalesMember 2019-04-01 2019-06-30 0001059262 us-gaap:GeneralAndAdministrativeExpenseMember 2019-04-01 2019-06-30 0001059262 us-gaap:GeneralAndAdministrativeExpenseMember 2019-01-01 2019-06-30 0001059262 sp:BagsMember us-gaap:NoncompeteAgreementsMember 2018-11-30 2018-11-30 0001059262 sp:BagsMember us-gaap:TradeNamesMember 2018-11-30 2018-11-30 0001059262 sp:BagsMember us-gaap:TechnologyBasedIntangibleAssetsMember 2018-11-30 0001059262 sp:BagsMember us-gaap:TradeNamesMember 2018-11-30 0001059262 sp:BagsMember us-gaap:NoncompeteAgreementsMember 2018-11-30 0001059262 sp:BagsMember 2018-11-30 0001059262 sp:BagsMember us-gaap:CustomerRelationshipsMember 2018-11-30 0001059262 srt:ScenarioPreviouslyReportedMember sp:BagsMember 2018-11-30 0001059262 srt:RestatementAdjustmentMember sp:BagsMember 2018-11-30 0001059262 sp:BagsMember 2018-11-30 2018-11-30 0001059262 sp:BagsMember 2019-01-01 2019-06-30 0001059262 sp:BagsMember 2019-04-01 2019-06-30 0001059262 srt:MinimumMember sp:BagsMember us-gaap:CustomerRelationshipsMember 2018-11-30 2018-11-30 0001059262 srt:MaximumMember sp:BagsMember us-gaap:TechnologyBasedIntangibleAssetsMember 2018-11-30 2018-11-30 0001059262 srt:MaximumMember sp:BagsMember us-gaap:CustomerRelationshipsMember 2018-11-30 2018-11-30 0001059262 srt:MinimumMember sp:BagsMember us-gaap:TechnologyBasedIntangibleAssetsMember 2018-11-30 2018-11-30 0001059262 sp:CompensationandPayrollWithholdingsMember 2018-12-31 0001059262 us-gaap:OtherNoncurrentLiabilitiesMember 2018-12-31 0001059262 sp:AccruedExpensesMember 2018-12-31 0001059262 sp:CompensationandPayrollWithholdingsMember 2019-06-30 0001059262 sp:CentralMergerMember us-gaap:GeneralAndAdministrativeExpenseMember 2018-04-01 2018-06-30 0001059262 sp:CentralMergerMember us-gaap:GeneralAndAdministrativeExpenseMember 2018-01-01 2018-06-30 0001059262 sp:CentralMergerMember us-gaap:GeneralAndAdministrativeExpenseMember 2019-01-01 2019-06-30 0001059262 sp:CentralMergerMember us-gaap:GeneralAndAdministrativeExpenseMember 2019-04-01 2019-06-30 0001059262 2023-01-01 2019-06-30 0001059262 2022-01-01 2019-06-30 0001059262 2019-01-01 2019-06-30 0001059262 2021-01-01 2019-06-30 0001059262 2024-01-01 2019-06-30 0001059262 2020-01-01 2019-06-30 0001059262 2019-07-01 2019-06-30 0001059262 us-gaap:DevelopedTechnologyRightsMember 2018-12-31 0001059262 us-gaap:CustomerContractsMember 2019-06-30 0001059262 sp:TradeNamesAndTradeMarksMember 2019-06-30 0001059262 us-gaap:DevelopedTechnologyRightsMember 2019-06-30 0001059262 sp:TradeNamesAndTradeMarksMember 2019-01-01 2019-06-30 0001059262 us-gaap:CustomerContractsMember 2019-01-01 2019-06-30 0001059262 us-gaap:CustomerRelationshipsMember 2018-12-31 0001059262 sp:TradeNamesAndTradeMarksMember 2018-12-31 0001059262 us-gaap:DevelopedTechnologyRightsMember 2019-01-01 2019-06-30 0001059262 us-gaap:NoncompeteAgreementsMember 2019-06-30 0001059262 us-gaap:CustomerContractsMember 2018-12-31 0001059262 us-gaap:CustomerRelationshipsMember 2019-06-30 0001059262 us-gaap:NoncompeteAgreementsMember 2018-12-31 0001059262 us-gaap:NoncompeteAgreementsMember 2019-01-01 2019-06-30 0001059262 us-gaap:CustomerRelationshipsMember 2019-01-01 2019-06-30 0001059262 srt:MaximumMember 2019-01-01 2019-06-30 0001059262 srt:MinimumMember 2019-01-01 2019-06-30 0001059262 sp:SegmentOneMember 2019-06-30 0001059262 sp:SegmentTwoMember 2018-12-31 0001059262 sp:SegmentOneMember 2019-01-01 2019-06-30 0001059262 sp:SegmentTwoMember 2019-01-01 2019-06-30 0001059262 sp:SegmentTwoMember 2019-06-30 0001059262 sp:SegmentOneMember 2018-12-31 0001059262 sp:Collar2Member 2019-06-30 0001059262 sp:Collar1Member 2019-06-30 0001059262 sp:Collar3Member 2019-06-30 0001059262 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SubordinatedDebtObligationsMember 2019-06-30 0001059262 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SubordinatedDebtObligationsMember 2018-12-31 0001059262 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SubordinatedDebtObligationsMember 2018-12-31 0001059262 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:LineOfCreditMember 2019-06-30 0001059262 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SubordinatedDebtObligationsMember 2019-06-30 0001059262 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:LineOfCreditMember 2018-12-31 0001059262 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:LineOfCreditMember 2019-06-30 0001059262 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:LineOfCreditMember 2018-12-31 0001059262 2019-05-31 0001059262 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-01-01 2019-06-30 0001059262 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001059262 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001059262 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001059262 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0001059262 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0001059262 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0001059262 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-01-01 2018-06-30 0001059262 us-gaap:LineOfCreditMember 2018-12-31 0001059262 us-gaap:LineOfCreditMember 2019-06-30 0001059262 us-gaap:SubordinatedDebtObligationsMember 2019-06-30 0001059262 us-gaap:SubordinatedDebtObligationsMember 2018-12-31 0001059262 sp:SeniorCreditFacilityMember us-gaap:LineOfCreditMember 2019-06-30 0001059262 us-gaap:ConvertibleSubordinatedDebtMember 2019-01-01 2019-06-30 0001059262 sp:RestatedCreditAgreementMember sp:SwinglineLoansMember 2015-02-20 0001059262 sp:BaseRateLoansMember sp:RestatedCreditAgreementMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2015-02-20 2015-02-20 0001059262 sp:SeniorCreditFacilityMember us-gaap:LineOfCreditMember 2018-12-31 0001059262 sp:RestatedCreditAgreementMember sp:TermLoanFacilityMember 2018-11-30 0001059262 sp:RestatedCreditAgreementMember sp:TermLoanFacilityMember 2015-02-20 0001059262 sp:RestatedCreditAgreementMember us-gaap:LetterOfCreditMember 2018-11-30 0001059262 sp:RestatedCreditAgreementMember us-gaap:LineOfCreditMember 2019-06-30 0001059262 sp:RestatedCreditAgreementMember us-gaap:LineOfCreditMember 2015-02-20 0001059262 sp:RestatedCreditAgreementMember 2015-02-20 0001059262 srt:MinimumMember sp:RestatedCreditAgreementMember us-gaap:LineOfCreditMember 2015-02-20 2015-02-20 0001059262 sp:RestatedCreditAgreementMember 2018-11-30 0001059262 2018-01-01 2018-12-31 0001059262 sp:RestatedCreditAgreementMember us-gaap:LineOfCreditMember 2018-11-30 0001059262 sp:RestatedCreditAgreementMember us-gaap:LetterOfCreditMember 2015-02-20 0001059262 srt:MaximumMember sp:RestatedCreditAgreementMember us-gaap:LineOfCreditMember 2015-02-20 2015-02-20 0001059262 sp:LIBORLoansMember sp:RestatedCreditAgreementMember us-gaap:LineOfCreditMember 2015-02-20 2015-02-20 0001059262 sp:RestatedCreditAgreementMember 2019-01-01 2019-06-30 0001059262 sp:BaseRateLoansMember sp:RestatedCreditAgreementMember us-gaap:LineOfCreditMember us-gaap:BaseRateMember 2015-02-20 2015-02-20 0001059262 2016-05-31 0001059262 2016-05-01 2019-06-30 0001059262 sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2019-04-01 2019-06-30 0001059262 sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2018-04-01 2018-06-30 0001059262 sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2018-01-01 2018-06-30 0001059262 sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2019-01-01 2019-06-30 0001059262 srt:MinimumMember us-gaap:MunicipalBondsMember sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2002-12-31 0001059262 srt:ScenarioForecastMember sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2019-01-01 2019-12-31 0001059262 sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2018-01-01 2018-12-31 0001059262 srt:MinimumMember sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2002-01-01 2002-12-31 0001059262 sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2019-06-30 0001059262 srt:MaximumMember srt:ScenarioForecastMember sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2024-01-01 2024-12-31 0001059262 srt:MaximumMember srt:ScenarioForecastMember us-gaap:MunicipalBondsMember sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2025-12-31 0001059262 sp:BradleyInternationalAirportParkingFacilitiesOperatingAgreementMember 2018-12-31 0001059262 us-gaap:RestrictedStockUnitsRSUMember 2018-04-01 2018-06-30 0001059262 us-gaap:RestrictedStockUnitsRSUMember 2019-04-01 2019-06-30 0001059262 us-gaap:RestrictedStockUnitsRSUMember 2018-01-01 2018-06-30 0001059262 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-06-30 0001059262 srt:ExecutiveOfficerMember us-gaap:PerformanceSharesMember sp:LongTermIncentivePlanMember 2019-01-01 2019-06-30 0001059262 us-gaap:RestrictedStockUnitsRSUMember 2019-06-30 0001059262 us-gaap:PerformanceSharesMember sp:LongTermIncentivePlanMember 2019-01-01 2019-06-30 0001059262 us-gaap:RestrictedStockUnitsRSUMember sp:LongTermIncentivePlanMember 2018-01-01 2018-06-30 0001059262 us-gaap:EmployeeStockOptionMember 2018-01-01 2018-06-30 0001059262 us-gaap:PerformanceSharesMember sp:LongTermIncentivePlanMember 2018-01-01 2018-06-30 0001059262 srt:ExecutiveOfficerMember us-gaap:PerformanceSharesMember sp:LongTermIncentivePlanMember 2018-01-01 2018-06-30 0001059262 us-gaap:EmployeeStockOptionMember 2019-04-01 2019-06-30 0001059262 us-gaap:PerformanceSharesMember 2019-01-01 2019-06-30 0001059262 us-gaap:RestrictedStockUnitsRSUMember sp:LongTermIncentivePlanMember 2019-01-01 2019-06-30 0001059262 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-06-30 0001059262 srt:ExecutiveOfficerMember us-gaap:PerformanceSharesMember 2019-01-01 2019-06-30 0001059262 srt:MaximumMember us-gaap:PerformanceSharesMember 2019-06-30 0001059262 us-gaap:PerformanceSharesMember 2019-04-01 2019-06-30 0001059262 us-gaap:PerformanceSharesMember 2018-01-01 2018-06-30 0001059262 us-gaap:PerformanceSharesMember 2018-04-01 2018-06-30 0001059262 us-gaap:EmployeeStockOptionMember 2018-04-01 2018-06-30 0001059262 srt:ExecutiveOfficerMember us-gaap:PerformanceSharesMember sp:LongTermIncentivePlanMember 2019-04-01 2019-06-30 0001059262 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-03-31 0001059262 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-03-31 0001059262 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-04-01 2019-06-30 0001059262 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-01-01 2019-03-31 0001059262 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-12-31 0001059262 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-06-30 0001059262 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-04-01 2019-06-30 0001059262 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-12-31 0001059262 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-01-01 2019-03-31 0001059262 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:LeaseTypeContractsMember sp:SegmentTwoMember 2019-01-01 2019-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember sp:ManagementTypeContractsMember 2018-04-01 2018-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember 2019-01-01 2019-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember sp:ManagementTypeContractsMember 2019-01-01 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:LeaseTypeContractsMember sp:SegmentOneMember 2018-01-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:SegmentTwoMember 2019-01-01 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:SegmentTwoMember 2018-01-01 2018-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember 2018-01-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:ManagementTypeContractsMember sp:SegmentTwoMember 2019-01-01 2019-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember 2018-04-01 2018-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember sp:ManagementTypeContractsMember 2019-04-01 2019-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember sp:LeaseTypeContractsMember 2019-04-01 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:ManagementTypeContractsMember sp:SegmentOneMember 2019-04-01 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:ManagementTypeContractsMember sp:SegmentOneMember 2018-01-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:LeaseTypeContractsMember sp:SegmentTwoMember 2018-04-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:SegmentOneMember 2018-04-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:SegmentOneMember 2018-01-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:LeaseTypeContractsMember sp:SegmentTwoMember 2018-01-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:ManagementTypeContractsMember sp:SegmentTwoMember 2019-04-01 2019-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember sp:LeaseTypeContractsMember 2018-01-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:ManagementTypeContractsMember sp:SegmentTwoMember 2018-01-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:ManagementTypeContractsMember sp:SegmentOneMember 2019-01-01 2019-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember sp:LeaseTypeContractsMember 2018-04-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:ManagementTypeContractsMember sp:SegmentTwoMember 2018-04-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:ManagementTypeContractsMember sp:SegmentOneMember 2018-04-01 2018-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember 2019-04-01 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:LeaseTypeContractsMember sp:SegmentOneMember 2019-01-01 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:LeaseTypeContractsMember sp:SegmentOneMember 2019-04-01 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:SegmentTwoMember 2019-04-01 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:SegmentOneMember 2019-04-01 2019-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember sp:ManagementTypeContractsMember 2018-01-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:SegmentTwoMember 2018-04-01 2018-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:SegmentOneMember 2019-01-01 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:LeaseTypeContractsMember sp:SegmentTwoMember 2019-04-01 2019-06-30 0001059262 us-gaap:OperatingSegmentsMember sp:LeaseTypeContractsMember sp:SegmentOneMember 2018-04-01 2018-06-30 0001059262 us-gaap:MaterialReconcilingItemsMember sp:LeaseTypeContractsMember 2019-01-01 2019-06-30 0001059262 us-gaap:SubsequentEventMember 2019-07-31 xbrli:pure iso4217:USD xbrli:shares xbrli:shares sp:voting_interest_model_entity sp:variable_interest_entity sp:partnership sp:contract iso4217:USD sp:segment sp:parking_space

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q




☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended		June 30, 2019
Or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number: 000-50796

SP Plus Corporation

(Exact Name of Registrant as Specified in Its Charter)



Delaware		16-1171179
(State or Other Jurisdiction of		(I.R.S. Employer Identification No.)
Incorporation or Organization)

200 E. Randolph Street, Suite 7700

Chicago, Illinois 60601-7702

(Address of Principal Executive Offices, Including Zip Code)

(312) 274-2000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	SP	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer	ý	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.



Class	Outstanding at July 31, 2019
Common Stock, $0.001 par value per share	22,948,766	Shares

Table of Contents

SP PLUS CORPORATION

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION	2
Item 1. Financial Statements	2
Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018	2
Condensed Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2019 and 2018	3
Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 2019 and 2018	4
Condensed Consolidated Statements of Stockholders' Equity (unaudited) for the six months ended June 30, 2019 and 2018	5
Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2019 and 2018	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures about Market Risk	45
Item 4. Controls and Procedures	45

PART II. OTHER INFORMATION	47
Item 1. Legal Proceedings	47
Item 1A. Risk Factors	47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3. Defaults Upon Senior Securities	47
Item 4. Mine Safety Disclosures	47
Item 5. Other Information	48
Item 6. Exhibits	48

Signatures	49

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SP Plus Corporation

Condensed Consolidated Balance Sheets



(millions, except for share and per share data)	June 30, 2019			December 31, 2018
	(unaudited)
Assets
Cash and cash equivalents	$	22.3		$	39.9
Notes and accounts receivable, net	162.1			150.7
Prepaid expenses and other	14.1			17.2
Total current assets	198.5			207.8
Leasehold improvements, equipment and construction in progress, net	42.3			40.3
Right-of-use assets	454.2			—
Other assets
Advances and deposits	4.3			4.2
Other intangible assets, net	158.4			166.0
Favorable acquired lease contracts, net	—			17.6
Equity investments in unconsolidated entities	10.3			9.8
Other assets, net	19.9			17.3
Deferred taxes	13.7			14.6
Cost of contracts, net	4.4			9.2
Goodwill	585.8			585.5
Total other assets	796.8			824.2
Total assets	$	1,491.8		$	1,072.3
Liabilities and stockholders’ equity
Accounts payable	$	107.4		$	110.1
Accrued rent	18.9			23.5
Compensation and payroll withholdings	23.0			25.8
Property, payroll and other taxes	6.5			9.5
Accrued insurance	19.8			19.7
Accrued expenses	36.8			45.1
Short-term lease liabilities	117.6			—
Current portion of long-term obligations under credit facility and other long-term borrowings	14.0			13.2
Total current liabilities	344.0			246.9
Long-term borrowings, excluding current portion
Obligations under credit facility	343.8			360.9
Other long-term borrowings	14.5			12.6
	358.3			373.5
Long-term lease liabilities	348.4			—
Unfavorable acquired lease contracts, net	—			24.7
Other long-term liabilities	59.2			58.6
Total noncurrent liabilities	765.9			456.8
Stockholders’ equity
Preferred stock, par value $0.01 per share; 5,000,000 shares authorized as of June 30, 2019 and December 31, 2018; no shares issued	—			—
Common stock, par value $0.001 per share; 50,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 22,879,409 and 22,783,976 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	—			—
Treasury stock, at cost; 726,899 and 305,183 shares as of June 30, 2019 and December 31, 2018, respectively	(21.1		)	(7.5		)
Additional paid-in capital	259.5			257.7
Accumulated other comprehensive loss	(3.1		)	(2.4		)
Retained earnings	146.5			120.7
Total SP Plus Corporation stockholders’ equity	381.8			368.5
Noncontrolling interest	0.1			0.1
Total stockholders’ equity	381.9			368.6
Total liabilities and stockholders’ equity	$	1,491.8		$	1,072.3

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SP Plus Corporation

Condensed Consolidated Statements of Income



	Three Months Ended						Six Months Ended
(millions, except for share and per share data) (unaudited)	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Services revenue
Lease type contracts	$	105.2		$	107.4		$	203.0		$	206.9
Management type contracts	129.9			87.7			262.8			182.2
	235.1			195.1			465.8			389.1
Reimbursed management type contract revenue	179.1			167.1			357.8			339.9
Total services revenue	414.2			362.2			823.6			729.0
Cost of services
Lease type contracts	91.8			94.5			181.5			189.0
Management type contracts	81.4			49.5			169.2			109.5
	173.2			144.0			350.7			298.5
Reimbursed management type contract expense	179.1			167.1			357.8			339.9
Total cost of services	352.3			311.1			708.5			638.4
Gross profit
Lease type contracts	13.4			12.9			21.5			17.9
Management type contracts	48.5			38.2			93.6			72.7
Total gross profit	61.9			51.1			115.1			90.6
General and administrative expenses	27.7			22.3			54.8			44.6
Depreciation and amortization	7.3			4.5			14.5			8.5
Operating income	26.9			24.3			45.8			37.5
Other expenses (income)
Interest expense	4.9			2.2			9.9			4.3
Interest income	(0.1		)	(0.1		)	(0.2		)	(0.2		)
Equity in earnings from investment in unconsolidated entity	—			—			—			(10.0		)
Total other expenses (income)	4.8			2.1			9.7			(5.9		)
Earnings before income taxes	22.1			22.2			36.1			43.4
Income tax expense	5.8			6.0			8.9			11.3
Net income	16.3			16.2			27.2			32.1
Less: Net income attributable to noncontrolling interest	1.1			0.9			1.4			1.5
Net income attributable to SP Plus Corporation	$	15.2		$	15.3		$	25.8		$	30.6
Common stock data
Net income per common share
Basic	$	0.68		$	0.68		$	1.15		$	1.37
Diluted	$	0.68		$	0.68		$	1.14		$	1.36
Weighted average shares outstanding
Basic	22,382,139			22,370,923			22,445,825			22,335,835
Diluted	22,532,213			22,644,884			22,600,107			22,597,131

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SP Plus Corporation

Condensed Consolidated Statements of Comprehensive Income



	Three Months Ended						Six Months Ended
(millions) (unaudited)	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Net income	$	16.3		$	16.2		$	27.2		$	32.1
Other comprehensive expense	(0.9		)	(0.2		)	(0.7		)	(0.6		)
Comprehensive income	15.4			16.0			26.5			31.5
Less: Comprehensive income attributable to noncontrolling interest	1.1			0.9			1.4			1.5
Comprehensive income attributable to SP Plus Corporation	$	14.3		$	15.1		$	25.1		$	30.0

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SP Plus Corporation

Condensed Consolidated Statements of Stockholders' Equity



Six months ended June 30, 2018 (unaudited)
	Common Stock
(millions, except share and per share data)	Number of Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Retained Earnings		Treasury Stock			Noncontrolling Interest			Total
Balance (deficit) at January 1, 2018	22,542,672	$	—	$	254.6	$	(1.2	)	$	67.0	$	(7.5	)	$	0.2		$	313.1
Net income	—	—		—		—			15.3		—			0.6			15.9
Foreign currency translation	—	—		—		(0.4		)	—		—			—			(0.4		)
Issuance of restricted stock units	45,963	—		—		—			—		—			—			—
Issuance of performance stock units	48,174	—		—		—			—		—			—			—
Non-cash stock-based compensation related to restricted stock units and performance share units	—	—		0.6		—			—		—			—			0.6
Distribution to noncontrolling interest	—	—		—		—			—		—			(0.8		)	(0.8		)
Balance (deficit) at March 31, 2018	22,636,809	$	—	$	255.2	$	(1.6	)	$	82.2	$	(7.5	)	$	—		$	328.3
Net income	—	—		—		—			15.3		—			0.9			16.2
Foreign currency translation	—	—		—		(0.2		)	—		—			—			(0.2		)
Issuance of stock grants	20,757	—		0.7		—			—		—			—			0.7
Non-cash stock-based compensation related to restricted stock units and performance share units	—	—		0.9		—			—		—			—			0.9
Distribution to noncontrolling interest	—	—		—		—			—		—			(0.8		)	(0.8		)
Balance (deficit) at June 30, 2018	22,657,566	$	—	$	256.8	$	(1.8	)	$	97.6	$	(7.5	)	$	0.1		$	345.2

Note: Amounts may not foot due to rounding.

See Notes to Condensed Consolidated Financial Statements.

Table of Contents



Six months ended June 30, 2019 (unaudited)
	Common Stock
(millions, except share and per share data)	Number of Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Retained Earnings		Treasury Stock			Noncontrolling Interest			Total
Balance (deficit) at January 1, 2019	22,783,976	$	—	$	257.7	$	(2.4	)	$	120.7	$	(7.5	)	$	0.1		$	368.6
Net income	—	—		—		—			10.6		—			0.3			10.9
Foreign currency translation	—	—		—		0.2			—		—			—			0.2
Issuance of restricted stock units	7,518	—		—		—			—		—			—			—
Issuance of performance stock units	62,094	—		—		—			—		—			—			—
Non-cash stock-based compensation related to restricted stock units and performance share units	—	—		0.4		—			—		—			—			0.4
Treasury stock	—	—		—		—			—		(2.3		)	—			(2.3		)
Distribution to noncontrolling interest	—	—		—		—			—		—			(0.7		)	(0.7		)
Balance (deficit) at March 31, 2019	22,853,588	$	—	$	258.0	$	(2.2	)	$	131.3	$	(9.8	)	$	(0.3	)	$	377.0
Net income	—	—		—		—			15.2		—			1.1			16.3
Foreign currency translation	—	—		—		(0.1		)	—		—			—			(0.1		)
Effective portion of cash flow hedge	—	—		—		(0.8		)	—		—			—			(0.8		)
Issuance of stock grants	14,076			0.5		—			—		—			—			0.5
Issuance of restricted stock units	11,745	—		—		—			—		—			—			—
Non-cash stock-based compensation related to restricted stock units and performance share units	—	—		1.0		—			—		—			—			1.0
Treasury stock	—	—		—		—			—		(11.3		)	—			(11.3		)
Distribution to noncontrolling interest	—	—		—		—			—		—			(0.7		)	(0.7		)
Balance (deficit) at June 30, 2019	22,879,409	$	—	$	259.5	$	(3.1	)	$	146.5	$	(21.1	)	$	0.1		$	381.9

Note: Amounts may not foot due to rounding.

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SP Plus Corporation

Condensed Consolidated Statements of Cash Flows



	Six Months Ended
(millions) (unaudited)	June 30, 2019			June 30, 2018
Operating activities
Net income	$	27.2		$	32.1
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	15.1			9.0
Net amortization of acquired lease contracts	—			0.2
Net equity in earnings of unconsolidated entities (net of distributions)	(0.5		)	(0.3		)
Gain on sale of equity method investment in unconsolidated entity	—			(10.1		)
Amortization of debt issuance costs	0.2			0.4
Amortization of original discount on borrowings	0.2			0.3
Non-cash stock-based compensation	1.8			2.2
Provisions for losses on accounts receivable	0.3			0.1
Deferred income taxes	1.0			—
Changes in operating assets and liabilities
Notes and accounts receivable	(11.8		)	(8.7		)
Prepaid assets	3.5			2.8
Right-of-use assets	67.2			—
Other assets	(2.9		)	0.5
Accounts payable	(2.7		)	(7.9		)
Long-term lease liabilities	(70.1		)	—
Accrued liabilities	(7.2		)	4.7
Net cash provided by operating activities	21.3			25.3
Investing activities
Purchase of leasehold improvements and equipment	(4.2		)	(4.0		)
Proceeds from sale of equipment and contract terminations	0.2			0.1
Proceeds from sale of equity method investee's sale of assets	—			19.3
Cost of contracts purchased	(1.4		)	(0.7		)
Net cash (used in) provided by investing activities	(5.4		)	14.7
Financing activities
Payments on credit facility revolver	(239.3		)	(85.9		)
Proceeds from credit facility revolver	227.4			83.1
Payments on credit facility term loan	(5.6		)	(25.0		)
Payments on other long-term borrowings	(1.0		)	(0.2		)
Distribution to noncontrolling interest	(1.4		)	(1.6		)
Payments of debt issuance costs and original discount on borrowings	—			(0.1		)
Repurchase of common stock	(13.6		)	—
Net cash used in financing activities	(33.5		)	(29.7		)
Effect of exchange rate changes on cash and cash equivalents	—			(0.6		)
(Decrease) increase in cash and cash equivalents	(17.6		)	9.7
Cash and cash equivalents at beginning of year	39.9			22.8
Cash and cash equivalents at end of period	$	22.3		$	32.5
Supplemental disclosures
Cash paid during the period for
Interest	$	9.3		$	3.7
Income taxes, net	$	7.9		$	7.3

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SP Plus Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Significant Accounting Policies and Practices

The Company

SP Plus Corporation (the "Company") provides parking management, ground transportation and other ancillary services to commercial, hospitality, institutional, municipal and governmental, and aviation clients across the United States, Puerto Rico and Canada. These services include on-site parking management, valet parking, ground transportation services, facility maintenance, event logistics, baggage handling services, remote airline check-in services, security services, municipal meter revenue collection and enforcement services, and consulting services. The Company also schedules and supervises service personnel as well as provides customer service, marketing, accounting and revenue control functions necessary to provide such services. The Company typically enters into contractual relationships with property owners or managers as opposed to owning facilities.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures normally included in the Condensed Consolidated Balance Sheets, Statements of Income, Comprehensive Income, Stockholders' Equity and Cash Flows prepared in conformity with U.S. GAAP have been condensed or omitted as permitted by such rules and regulations.

In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2019 are not necessarily indicative of the results that might be expected for any other interim period or the fiscal year ending December 31, 2019. The financial statements presented in this report should be read in conjunction with the Company’s annual Consolidated Financial Statements and notes thereto included in the Annual Report on Form 10-K filed on February 27, 2019.

Cash and cash equivalents

Cash equivalents represent funds temporarily invested in money market instruments with maturities of three months or less. Cash equivalents are stated at cost, which approximates fair value. Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements was $0.2 million and $1.7 million as of June 30, 2019 and December 31, 2018, respectively, and are included within Cash and cash equivalents within the Condensed Consolidated Balance Sheets.

Financial Instruments

The carrying values of cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments. Book overdrafts of $27.8 million and $34.0 million are included within Accounts payable within the Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018, respectively. Long-term debt has a carrying value that approximates fair value because these instruments bear interest at variable market rates.

Equity Investments in Unconsolidated Entities

The Company has ownership interests in 30 active partnerships, joint ventures or similar arrangements that operate parking facilities, of which 25 are consolidated under the VIE or voting interest models and 5 are unconsolidated where the Company’s ownership interests range from 30-50 percent and for which there are no indicators of control. The Company accounts for such investments under the equity method of accounting, and its underlying share of each investee’s equity is included in Equity investments in unconsolidated entities within the Condensed Consolidated Balance Sheets. As the operations of these entities are consistent with the Company’s underlying core business operations, the equity in earnings of these investments are included in Services revenue - lease type contracts within the Condensed Consolidated Statements of Income. The equity earnings in these related investments were $0.9 million and $0.6 million for the three months ended June 30, 2019 and 2018, respectively, and were $1.6 million and $1.2 million for the six months ended June 30, 2019 and 2018, respectively.

Table of Contents

In October 2014, the Company entered into an agreement to establish a joint venture with Parkmobile USA, Inc. and contributed all of the assets and liabilities of its proprietary Click and Park parking prepayment business in exchange for a 30% interest in the newly formed legal entity called Parkmobile, LLC (“Parkmobile”). The Parkmobile joint venture combined two parking transaction engines, with SP Plus contributing the Click and Park® parking prepayment systems, which enables consumers to reserve and pay for parking online in advance and Parkmobile USA contributing its on demand transaction engine that allows consumers to transact real-time payment for parking privileges in both on- and off-street environments. On January 3, 2018, the Company closed a transaction to sell the entire 30% interest in Parkmobile to Parkmobile USA, Inc. for a gross sale price of $19.0 million and in the first quarter of 2018, the Company recognized a pre-tax gain of $10.1 million, net of closing costs, and included in Equity in earnings from investment in unconsolidated entity within the Condensed Consolidated Statements of Income for the six months ended June 30, 2018. The Company historically accounted for its investment in the Parkmobile joint venture using the equity method of accounting, and its underlying share of equity in Parkmobile was included in Equity investments in unconsolidated entities within the Condensed Consolidated Balance Sheets. The equity losses (earnings) in the Parkmobile joint venture were historically included in Equity in earnings from investment in unconsolidated entity within the Condensed Consolidated Statements of Income.

Noncontrolling Interests

Noncontrolling interests represent the noncontrolling holders’ percentage share of income or losses from the subsidiaries in which the Company holds a majority, but less than 100 percent, ownership interest and the results of which are consolidated and included within the Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Topic 842 requires lessees to record most leases on the balance sheet and recognize expense on the income statement. Additionally, the classification criteria and the accounting for sales-type and direct financing leases is modified for lessors. Under Topic 842, all entities are required to recognize "right-of-use" ("ROU") assets and lease liabilities on the balance sheet for all leases classified as either operating or finance leases. Lease classification will determine recognition of lease-related revenue and expense. Since the release of Topic 842, the FASB also issued the following additional ASUs updating the topic:


•	In January 2018, the FASB issued ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842


•	In July 2018, the FASB issued ASU No. 2018-11, Lease (Topic 842): Targeted Improvements


•	In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases


•	In December 2018, the FASB issued ASU No. 2018-20, Narrow Scope Improvements for Lessors


•	In March 2019, the FASB issued ASU No. 2019-01, Codification Improvements

Topic 842 and its related ASUs are effective for interim and annual reporting periods beginning after December 15, 2018.

The Company adopted the provisions of Topic 842 on January 1, 2019 under the modified retrospective approach and has used the effective date as the initial application date. Therefore, comparative periods have not been recast and continue to be reported under the accounting standards in effect for those prior periods presented. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification.

The standard had a material impact in our Condensed Consolidated Balance Sheet, but did not have a material impact in the Company's Condensed Consolidated Income Statement and no impact in the Condensed Consolidated Statement of Cash Flow. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the Company's accounting for finance leases remained substantially unchanged.

Table of Contents

The impact of the standard on the Condensed Consolidated Balance Sheet as of June 30, 2019 is as follows:



	Impact of Changes in Accounting Policies as of June 30, 2019
(millions) (unaudited)	As Reported		Balances without Adoption of Topic 842		Impact of Adoption Increase/(Decrease)
Assets
Prepaid expenses and other ^(a)	$	14.1	$	14.5	$	(0.4	)
Right-of-use assets ^(b)	454.2		—		454.2
Favorable acquired lease contracts, net ^(c)	—		15.8		(15.8		)
Cost of contracts, net ^(d)	4.4		8.5		(4.1		)
Liabilities
Accrued rent ^(e)	$	18.9	$	26.8	$	(7.9	)
Short-term lease liabilities ^(f)	117.6		—		117.6
Long-term lease liabilities ^(g)	348.4		—		348.4
Unfavorable lease contracts, net ^(h)	—		21.3		(21.3		)
Other long-term liabilities ⁽ⁱ⁾	59.2		62.0		(2.8		)

(a) Represents prepaid rent reclassified to Right-of-use assets

(b) Represents capitalization of operating lease assets and reclassification of prepaid and deferred rent, lease incentives, favorable

and unfavorable acquired lease contracts, net and cost of contract balances on operating leases

(d) Represents cost of contract, net reclassified to Right-of-use assets

(e) Represents short-term deferred rent reclassified to Right-of-use assets

(f) Represents the recognition of short-term operating lease liabilities

(g) Represents the recognition of long-term operating lease liabilities

(h) Represents unfavorable acquired lease contracts, net reclassified to Right-of-use assets

(i) Represents long-term deferred rent reclassified to Right-of-use assets

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Under existing guidance, the accounting for nonemployee share-based payments differs from that applied to employee awards, particularly with regard to the measurement date and the impact of performance conditions. This ASU provides that existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. ASU No. 2018-07 is effective for all companies for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company adopted the standard as of January 1, 2019. The standard did not have an impact on the Company’s financial position, results of operations, cash flows and financial statement disclosures.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This Update modifies accounting guidance for hedge accounting by making more hedge strategies eligible for hedge accounting, amending presentation and disclosure requirements, and changing how companies assess ineffectiveness. The intent is to simplify the application of hedge accounting and increase transparency of information about an entity’s risk management activities. The amended guidance is effective for annual periods beginning after December 15, 2018. The Company adopted the standard as of January 1, 2019. The standard did not have an impact on the Company’s financial position, results of operations, cash flows and financial statement disclosures.

In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as Benchmark Interest Rate for Hedge Accounting Purposes. This Update permits use of the OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes. This Update is effective for fiscal years beginning after December 15, 2018. The Company adopted the standard as of January 1, 2019. The standard did not have an impact on the Company’s financial position, results of operations, cash flows and financial statement disclosures.

Table of Contents

Accounting Pronouncements to be Adopted

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. The new guidance simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. ASU No. 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests. The Company is currently assessing the impact of adopting the standard on the Company's financial position, results of operations, cash flows and financial statement disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (Topic 326). The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact of adopting this standard on the Company’s financial position, results of operations, cash flows and financial statement disclosures.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal - Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification (ASC) 350-40 to determine which implementation costs to capitalize as assets. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The standard is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact of adopting this standard on the Company’s financial position, results of operations, cash flows and financial statement disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820). This standard modifies the disclosures on fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income. The standard is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact of adopting this standard on the Company’s financial position, results of operations, cash flows and financial statement disclosures.

2. Leases

The Company leases parking facilities, office space, warehouses, vehicles and equipment and determines if an arrangement is a lease at inception. The Company rents or subleases certain real estate to third parties. The Company's sublease portfolio consists of operating leases for space within our leased parking facilities.

Prior to January 1, 2019, the Company recognized lease expense related to operating leases on a straight-line basis over the terms of the leases and, accordingly, recorded the difference between cash rent payments and recognition of rent expense as a deferred rent liability or prepaid rent. Landlord-funded leasehold improvements were also recorded as deferred rent liabilities and were amortized as a reduction of rent expense over the noncancelable term of the related operating lease. For leases that included one or more options to renew, the exercise of such renewal options is at the Company's sole discretion or mutual agreement. Certain of the Company's lease agreements included variable rent consisting primarily of payments that are a percentage of parking services revenue based on contractual levels and rental payments adjusted periodically for inflation.

Upon adoption of Topic 842, ROU assets represent the Company's "right-of-use" over an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The ROU asset includes cumulative prepaid or accrued rent on adoption date, unamortized lease incentives, unamortized initial direct costs, unamortized favorable acquired lease contracts, net and unfavorable acquired lease contracts, net initially recognized prior to adoption of Topic 842. The short term lease exception has been applied to leases with an initial term of 12 months or less and these leases are not recorded on the balance sheet.

Table of Contents

Service concession arrangements within the scope of ASU No. 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services, are excluded from the scope of Topic 842. Lease costs associated with these arrangements is recorded as a reduction of revenue. See Note 5. Revenue for further discussion.

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. Lease expense is recognized on a straight-line basis over the lease term.

For leases that include one or more options to renew, the exercise of such renewal options is at the Company's sole discretion or mutual agreement. Equipment and vehicle leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Variable lease components comprising of payments that are a percentage of parking services revenue based on contractual levels and rental payments adjusted periodically for inflation are not included in lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of leased assets and liabilities and classification on the Condensed Consolidated Balance Sheet as of June 30, 2019 were as follows:



(millions) (unaudited)	Classification	June 30, 2019
Assets
Operating	Right-of-use assets	$	454.2
Finance	Leasehold improvements, equipment and construction in progress, net ^(a)	16.9
Total leased assets		$	471.1
Liabilities
Current
Operating	Short-term lease liability	$	117.6
Finance	Current portion of long-term obligations under credit facility and other long-term borrowings	2.4
Noncurrent
Operating	Long-term lease liability	348.4
Finance	Other long-term borrowings	14.5
Total lease liabilities		$	482.9

^(a) Finance lease assets are recorded net of accumulated amortization of $0.8 million as of June 30, 2019

The components of lease cost and classification on the Condensed Consolidated Statement of Income for the three and six months ended June 30, 2019 were as follows:



		Three Months Ended		Six Months Ended
(millions) (unaudited)	Classification	June 30, 2019		June 30, 2019
Operating lease cost ^(a)	Cost of services - lease type contracts	$	59.1	$	116.1
Operating lease cost ^{(a) (b)}	General and administrative expenses	1.0		2.3
Finance lease cost
Amortization of leased assets	Depreciation and amortization	0.3		0.8
Interest on lease liabilities	Interest expense	0.2		0.4
Net lease cost		$	60.6	$	119.6

^(a) Includes short-term leases and variable lease costs

^(b) Operating lease cost included in General and administrative expenses are related to leases for office space

Table of Contents

Rent expense on operating leases was $60.1 million and $118.4 million for the three and six months ended June 30, 2019, respectively. The following table presents information on short term and variable lease costs:



	Three Months Ended		Six Months Ended
(millions) (unaudited)	June 30, 2019		June 30, 2019
Short-term lease cost	$	9.1	$	17.9
Variable lease cost	15.3		28.4
Total short term and variable lease cost	$	24.4	$	46.3

Sublease income generated during the three and six months ended June 30, 2019 was not material.

The Company has entered into operating lease arrangements as of June 30, 2019 that are effective for future periods. The total amount of right-of-use assets and lease liabilities related to these arrangements are immaterial.

Maturities of lease liabilities as of June 30, 2019 were as follows:



(millions) (unaudited)	Operating Leases Liabilities		Finance Leases Liabilities		Total
2019	$	72.0	$	1.6	$	73.6
2020	126.0		3.2		129.2
2021	96.3		3.2		99.5
2022	76.2		2.7		78.9
2023	50.7		2.1		52.8
After 2024	120.6		7.0		127.6
Total lease payments	541.8		19.8		561.6
Less: Imputed interest	75.8		2.9		78.7
Present value of lease liabilities	$	466.0	$	16.9	$	482.9

Future sublease income for the above periods shown was excluded as the amounts are not material.

Lease term and discount rate information was as follows:



(unaudited)	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	5.7
Finance leases	7.8
Weighted-average discount rate
Operating leases	4.8	%
Finance leases	5.1	%

Supplemental cash flow information related to leases was as follows:



	Six Months Ended
(millions) (unaudited)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	90.5
Operating cash flows from finance leases	0.4
Financing cash flows from finance leases	1.0
Leased assets obtained in exchange for new operating liabilities	29.2
Leased assets obtained in exchange for new finance lease liabilities	$	3.6

Table of Contents

3. Acquisition

On November 30, 2018, the Company acquired the outstanding shares of Bags (the "Acquisition"). Bags is a leading provider of baggage delivery, remote airline check in, and other related services, primarily to airline, airport and hospitality clients. Subject to the terms and conditions of the Stock Purchase Agreement, as consideration for the acquisition of Bags, SP Plus paid to the Sellers total consideration of approximately $283.6 million. The consideration is comprised of $275.0 million of contractual cash consideration, $8.1 million related to the preliminary net working capital and cash acquired and $0.5 million for certain individual taxes to be paid by the Seller (the “Cash Consideration”). As described in Note 17. Business Unit Segment Information, the Company integrated the Bags' operations into Segment Two (Aviation) for segment reporting purposes, effective November 30, 2018.

The Company's acquisition of Bags has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred, which is also generally measured at fair value or the net acquisition date fair values of the assets acquired and the liabilities assumed. The results of operations are reflected in the consolidated financial statements of the Company from the date of acquisition.

The Company incurred certain acquisition and integration costs associated with the transaction that were expensed as incurred and are reflected in the Condensed Consolidated Statements of Income. See Note 4. Acquisition, Restructuring and Integration Costs.

The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. As a result, during the measurement period, which may be up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed will be recorded with corresponding adjustments to goodwill. The Company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. The Company recorded measurement period adjustments during the six months ended June 30, 2019 related to an increase in assumed workers' compensation liabilities.

The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed:



(millions) (unaudited)	As Initially Reported November 30, 2018			Preliminary Measurement Period Adjustments			As Adjusted November 30, 2018
Cash and cash equivalents	$	5.9		$	—		$	5.9
Notes and accounts receivable	13.2			—			13.2
Prepaid expenses and other	2.0			—			2.0
Advances and deposits	0.2			—			0.2
Leasehold improvements, equipment and construction in progress, net	1.5			—			1.5
Other intangible assets, net	118.0			—			118.0
Goodwill	154.1			0.1			154.2
Accounts payable	(6.5		)	—			(6.5		)
Accrued expenses	(4.1		)	(0.1		)	(4.2		)
Other long-term liabilities	(0.7		)	—			(0.7		)
Net assets acquired and liabilities assumed	$	283.6		$	—		$	283.6

Goodwill amounting to $154.2 million represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The estimated goodwill to be recognized is attributable primarily to expanded revenue synergies and expanded opportunities in the aviation and hospitality businesses, and other benefits that the Company believes will result from combining its operations with the operations of Bags. The goodwill acquired is expected to be deductible for tax purposes.

Table of Contents

Other intangible assets, net acquired consist of the following:



(millions) (unaudited)	Estimated Life ⁽¹⁾	Estimated Fair Value
Trade name	5.0 Years	$	5.6
Customer relationships	12.4 - 15.8 Years	100.4
Existing technology	5.0 - 6.0 Years	10.4
Non-compete agreement	5.0 Years	1.6
Estimated fair value of other intangible assets		$	118.0

⁽¹⁾ Represents preliminary estimated life of assets acquired.

The fair value estimate for all identifiable intangible assets is based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). The estimated fair value of trade names was determined with the relief from royalty savings method, which is a commonly-used variation of the income approach. The Company considered the return on assets and market comparable methods when estimating an appropriate royalty rate for the trade names. The estimated fair value of acquired customer relationships was determined with the excess earnings method, which is a variation of the income approach. This approach calculates the excess of the future cash inflows (i.e., revenue from customers generated from the relationships) over the related cash outflows (i.e., customer servicing expenses) generated over the useful life of the relationship. The estimated fair value of developed or existing technology was determined utilizing the relief from royalty savings method under the income approach with additional consideration given to asset deterioration rates.

The final determination of fair value of intangible assets, as well as estimated useful lives, remains subject to change. The finalization may have a material impact on the valuation of intangible assets and the purchase price allocation, which is expected to be finalized subsequent to the transaction but within the measurement period.

Pro forma financial information

The following unaudited pro forma results of operations for the three and six months ended June 30, 2019 and 2018, assumes the Acquisition was completed on January 1, 2018, and as such Bags pre-acquisition results have been added to the Company’s historical results. The historical consolidated financial information of the Company and the acquisition have been adjusted in the pro forma information to give effect to pro forma events that are (1) directly attributable to the transaction, (2) factually supportable and (3) expected to have a continuing impact on the combined results. The pro forma results contained in the table below include adjustments for (i) amortization of acquired intangibles, (ii) reduced general and administrative expenses related to non-routine transaction expenses, (iii) increased interest expense related to the financing of the acquisition, and (iv) estimated income tax effect.

The unaudited pro forma condensed combined financial information is presented solely for informational purposes and is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company. The unaudited pro forma condensed combined financial statements do not give effect to the potential impact of any anticipated benefits from revenue synergies, cost savings or operating synergies that may result from the Acquisition or to any future disynergies and integration related costs. Also, the unaudited pro forma condensed combined financial information does not reflect possible adjustments related to potential restructuring or integration activities that have yet to be determined or transaction or other costs following the combination that are not expected to have a continuing impact on the business of the combined company. Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrent with, the closing of the transaction are not included in the unaudited pro forma condensed combined statement of income as such transaction costs were determined not to be significant. Additionally, the pro forma financial information does not reflect the costs which the Company has incurred or may incur to integrate Bags.



	Three Months Ended				Six Months Ended
(millions) (unaudited)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Total services revenue	$	414.2	$	402.0	$	823.6	$	807.7
Net income attributable to SP Plus Corporation	15.2		15.5		25.8		31.3

Services revenue related to Bags in 2019 that is included in the Condensed Consolidated Statements of Income was $44.3 million and $86.4 million for the three and six months ended June 30, 2019, respectively. Net income related to Bags in 2019 that is included in the Condensed Consolidated Statements of Income was $3.8 million and $6.8 million for the three and six months ended June 30, 2019, respectively. Services revenue and net income are included in Services revenue - Management type contracts and Net income attributable to SP Plus Corporation, respectively.

Table of Contents

4. Acquisition, Restructuring and Integration Costs

Acquisition, Restructuring and Integration Costs

The Company has incurred certain acquisition, restructuring, and integration costs that were expensed as incurred, which include:


•	transaction costs and other acquisition related costs (primarily professional services and advisory services) primarily related to the Bags acquisition (included within General and administrative expenses within the Consolidated Statements of Income);


•	costs (primarily severance and relocation costs) related to a series of Company initiated workforce reductions to increase organizational effectiveness and provide cost savings that can be reinvested in the Company's growth initiatives, during 2019 and 2018 (included within General and administrative expenses within the Condensed Consolidated Statements of Income); and


•	consulting costs for integration-related activities related to the Bags acquisition (included within General and administrative expenses within the Condensed Consolidated Statements of Income);

The aggregate costs associated with the acquisition, restructuring, and integration related costs for the three and six months ended June 30, 2019 and June 30, 2018 are summarized in the following table:



	Three Months Ended				Six Months Ended
(millions) (unaudited)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
General and administrative expenses	$	0.3	$	1.6	$	1.3	$	2.8

An accrual for acquisition, restructuring and integration costs of $0.4 million (of which, $0.4 million is included in Compensation and payroll withholdings within the Condensed Consolidated Balance Sheets) and $3.3 million (of which, $1.0 million is included in Compensation and payroll withholdings, $2.1 million is included in Accrued Expenses and $0.2 million is included in Other long-term liabilities within the Condensed Consolidated Balance Sheets) as of June 30, 2019 and December 31, 2018, respectively. As of June 30, 2019, all accruals for acquisition, restructuring, and integration are short-term in nature.

5. Revenue

The Company accounts for revenue in accordance with Topics 606 and 853. Topic 606 requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.

Contracts with customers and clients

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Once a contract is identified, the Company evaluates whether the combined or single contract should be accounted for as more than one performance obligation. Substantially all of our revenues come from the following two types of arrangements: Lease type and Management type contracts.

Services revenue - lease type contracts

Under lease type arrangements, the Company pays the property owner a fixed base rent or payment, percentage rent or payment that is tied to the facility’s financial performance, or a combination of both. The Company operates the parking facility and is responsible for most operating expenses, but typically is not responsible for major maintenance, capital expenditures or real estate taxes. Performance obligations for service revenues related to lease type contracts include parking for transient and monthly parkers. Revenue is recognized over time as the Company provides services. Certain expenses, primarily rental expense for the contractual arrangements that meet the definition of service concession arrangements, are recorded as a reduction of revenue for the three and six months ended June 30, 2019 and 2018.

Table of Contents

Services revenue - management type contracts

Management type contract revenue consists of management fees, including both fixed and performance-based fees. In exchange for this consideration, the Company has a bundle of performance obligations that include services such as managing the parking facility as well as ancillary services such as accounting, equipment leasing, consulting, insurance and other value-added services. The Company believes that it can generally purchase required insurance for the facility at lower rates than clients can obtain on their own because the Company is effectively self-insured for all liability, worker's compensation and health care claims by maintaining a large per-claim deductible. As a result, the Company generates operating income on the insurance provided under our management type contracts by focusing on risk management efforts and controlling losses. Management type contract revenues do not include gross customer collections at the managed locations as these revenues belong to the property owners rather than to the Company. Management type contracts generally provide the Company with management fees regardless of the operating performance of the underlying facilities. Revenue is recognized over time as the Company provides services.

Service concession arrangements

Service concession agreements within the scope of Topic 853 include both lease type and management type contracts. Revenue generated from service concession arrangements, is accounted for under the guidance of Topics 606 and 853. For the three and six months ended June 30, 2019 and June 30, 2018, respectively certain expenses (primarily rental expense) related to service concession arrangements and depreciation and amortization, have been recorded as a reduction of Service revenue - lease type contracts.

Contract modifications and taxes

Contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist when the modification either changes the consideration due to the Company or creates new performance obligations or changes the existing scope of the contract and related performance obligations. Most contract modifications are for services that are not distinct from the existing contract due to the fact that the Company is providing a bundle of performance obligations that are highly inter-related in the context of the contract, and are therefore accounted for as if they were part of that existing contract. Typically, modifications are accounted for prospectively as part of the existing contract.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, which are collected by the Company from a customer, are excluded from revenue.

Reimbursed management type contract revenue and expense

The Company recognizes both revenues and expenses, in equal amounts, that are directly reimbursed from the property owner for operating expenses incurred under a management type contract. The Company has determined it is the principal in these transactions as the nature of our performance obligations is for the Company to provide the services on behalf of the customer. As the principal to these related transactions, the Company has control of the promised services before they are transferred to the customer.

Disaggregation of revenue

The Company disaggregates its revenue from contracts with customers by type of arrangement for each of our reportable segments. The Company has concluded that such disaggregation of revenue best depicts the overall economic nature, timing and uncertainty of the Company's revenue and cash flows affected by the economic factors of the respective contractual arrangement. See Note 17. Business Unit Segment Information for further information on disaggregation of our revenue by segment.

Performance obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer or client, and is the unit of account under Topic 606. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company's contracts have a single performance obligation that is not separately identifiable from other promises in the contract and therefore not distinct, comprising the promise to provide a bundle of monthly performance obligations or parking services for transient or monthly parkers.

The contract price is generally deemed to be the transaction price. Some management type contracts include performance incentives that are based on variable performance measures. These incentives are constrained at contract inception and recognized once the customer has confirmed that the Company has met the contractually agreed upon performance measures as defined in the contract.

The Company's performance obligations are primarily satisfied over time as the Company provides the related services. Typically, revenue is recognized over time on a straight-line basis as the Company satisfies the related performance obligation. There are certain management type contracts where revenue is recognized based on costs incurred to date plus a reasonable margin. The Company has concluded this is a faithful depiction of how control is transferred to the customer. Performance obligations satisfied at a point in time for the three and six months ended June 30, 2019 and 2018 were not significant.

Table of Contents

The time between completion of the performance obligation and collection of cash is typically not more than 30 - 60 days. In certain contractual arrangements, such monthly parker contracts, cash is typically collected in advance of the Company commencing its performance obligations under the contractual arrangement.

On June 30, 2019, the Company had $145.9 million related to performance obligations that were unsatisfied or partially unsatisfied for which the Company expects to recognize revenue. This amount excludes variable consideration primarily related to contracts where the Company and customer share the gross revenues or operating profit for the location and contracts where transaction prices include performance incentives that are constrained at contract inception. These performance incentives are based on measures that are ascertained exclusively by future performance and therefore cannot be estimated at contract inception by the Company. The Company applies the practical expedient that permits exclusion of information about the remaining performance obligations that have original expected durations of one year or less. The Company expects to recognize the remaining performance obligations as revenue in future periods as follows:



(millions) (unaudited)	Remaining Performance Obligations
2019	$	36.0
2020	48.4
2021	28.5
2022	13.7
2023	9.6
2024 and thereafter	9.7
Total	$	145.9

Contract balances

The timing of revenue recognition, billings and cash collections results in accounts receivable, contract assets and contract liabilities. Accounts receivable represent amounts where the Company has an unconditional right to the consideration and therefore only the passage of time is required for the Company to receive consideration due from the customer. Both lease type and management type contracts have customers and clients where amounts are billed as work progresses or in advance in accordance with agreed-upon contractual terms. Billing may occur subsequent to or prior to revenue recognition, resulting in contract assets and contract liabilities. The Company, on occasion, receives advances or deposits from customers and clients, on both lease and management type contracts, before revenue is recognized, resulting in the recognition of contract liabilities.

Contract assets and contract liabilities are reported on a contract-by-contract basis and are included in Notes and accounts receivable, net and Accrued expenses, respectively, on the Condensed Consolidated Balance Sheets. Impairment charges related to accounts receivable for the three and six months ended June 30, 2019 and 2018, were not significant. There were no impairment charges recorded on contract assets and contract liabilities for the three and six months ended June 30, 2019 and 2018.

The following table provides information about accounts receivable, contract assets and contract liabilities with customers and clients as of June 30, 2019 (unaudited) and December 31, 2018:



(millions)	June 30, 2019			December 31, 2018
Accounts receivable	$	150.3		$	139.3
Contract asset	$	11.8		$	11.4
Contract liability	$	(14.9	)	$	(19.1	)

Changes in contract assets include recognition of additional consideration due from the customer are offset by reclassifications of contract asset balances to accounts receivable when the Company obtains an unconditional right to consideration, thereby establishing an accounts receivable. The following table provides information about changes to contract asset balances for the six-month periods ended June 30, 2019 and 2018:



	Six Months Ended
(millions) (unaudited)	June 30, 2019			June 30, 2018
Balance, beginning of period	$	11.4		$	12.2
Additional contract assets	64.7			68.4
Reclassification to accounts receivable	(64.3		)	(69.6		)
Balance, end of period	$	11.8		$	11.0

Table of Contents

Changes in contract liability primarily include additional contract liabilities and liquidation of contract liabilities when revenue is recognized. The following table provides information about changes to contract liability balances for the six-month periods ended June 30, 2019 and 2018:



	Six Months Ended
(millions) (unaudited)	June 30, 2019			June 30, 2018
Balance, beginning of period	$	19.1		$	20.5
Additional contract liabilities	81.6			87.7
Recognition of revenue from contract liabilities	(85.8		)	(92.7		)
Balance, end of period	$	14.9		$	15.5

Cost of contracts, net

Cost of contracts, net represents the cost of obtaining contractual rights associated with providing parking services for management type contracts. Incremental costs incurred to obtain service contracts are amortized on a straight line basis over the estimated life of the contracts, including anticipated renewals and terminations. This is consistent with the timing of when the Company satisfies the related performance obligations. Estimated lives are based on the contract life or anticipated lives of the contract.

The table below shows amortization expense related to cost of contracts for the three and six months ended June 30, 2019 and 2018. Amortization expense of cost of contracts related to service concession arrangements within the scope of Topic 853 is recorded as a reduction of revenue and was not significant for the three and six months ended June 30, 2019 and 2018, respectively.



	Three Months Ended				Six Months Ended
(millions) (unaudited)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Amortization expense related to cost of contract included in depreciation and amortization	$	0.3	$	0.8	$	0.6	$	1.5

As of June 30, 2019 and December 31, 2018 cost of contracts net of accumulated amortization included on the Condensed Consolidated Balance Sheets under Cost of contract, net were $4.4 million and $9.2 million, respectively. No impairment charges were recorded for the three and six months ended June 30, 2019 and 2018.

6. Legal and Other Commitments and Contingencies

The Company is subject to litigation in the normal course of its business. The outcomes of legal proceedings and claims brought against it and other loss contingencies are subject to significant uncertainty. The Company accrues a charge against income when its management determines that it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. In addition, the Company accrues for the authoritative judgments or assertions made against it by government agencies at the time of their rendering regardless of its intent to appeal. In addition, the Company is from time-to-time party to litigation, administrative proceedings and union grievances that arise in the normal course of business, and occasionally pays non-material amounts to resolve claims or alleged violations of regulatory requirements. There are no "normal course" matters that separately or in the aggregate, would, in the opinion of management, have a material adverse effect on its operation, financial condition or cash flow.

In determining the appropriate accounting for loss contingencies, the Company considers the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as its ability to reasonably estimate the amount of potential loss. The Company regularly evaluates current information available to determine whether an accrual should be established or adjusted. Estimating the probability that a loss will occur and estimating the amount of a potential loss or a range of potential loss involves significant estimation and judgment.

Table of Contents

7. Other Intangible Assets, net

The following presents a summary of other intangible assets, net:



		June 30, 2019 (unaudited)							December 31, 2018
(millions)	Weighted Average Life (Years)	Acquired Intangible Assets, Gross (1)		Accumulated Amortization			Acquired Intangible Assets, Net		Acquired Intangible Assets, Gross (1)		Accumulated Amortization			Acquired Intangible Assets, Net
Covenant not to compete	4.4	$	1.6	$	(0.2	)	$	1.4	$	1.6	$	—		$	1.6
Trade names and trademarks	4.4	5.6		(0.7		)	4.9		6.3		(0.7		)	5.6
Proprietary know how	5.2	10.4		(1.0		)	9.4		11.0		(0.8		)	10.2
Management contract rights	9.5	81.0		(34.8		)	46.2		81.0		(32.2		)	48.8
Customer relationships	14.4	100.4		(3.9		)	96.5		100.4		(0.6		)	99.8
Acquired intangible assets, net (2)	12.0	$	199.0	$	(40.6	)	$	158.4	$	200.3	$	(34.3	)	$	166.0

(1) Excludes the original cost and accumulated amortization of fully amortized intangible assets.

(2) Intangible assets have estimated remaining lives between four and fifteen years.

The table below shows the amortization expense related to intangible assets for the three and six months ended June 30, 2019 and June 30, 2018:



	Three Months Ended				Six Months Ended
(millions) (unaudited)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Amortization expense related to other intangible assets included in depreciation and amortization	$	3.8	$	1.3	$	7.6	$	2.7

8. Goodwill

The amounts for goodwill and changes to carrying value by reportable segment are as follows:



(millions) (unaudited)	Segment One		Segment Two		Total
Balance as of December 31, 2018	$	368.7	$	216.8	$	585.5
Foreign currency translation	0.2		—		0.2
Purchase price adjustments	—		0.1		0.1
Balance as of June 30, 2019	$	368.9	$	216.9	$	585.8

The Company tests goodwill at least annually for impairment (the Company has elected to annually test for potential impairment of goodwill on the first day of the fourth quarter) and tests more frequently if indicators are present or changes in circumstances suggest that impairment may exist. The indicators include, among others, declines in sales, earnings or cash flows or the development of a material adverse change in business climate. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component.

The Company completed its annual goodwill impairment test as of October 1, 2018, using a qualitative test (Step Zero), to determine the likelihood of impairment and if it was more likely than not that the fair value of the reporting units were less than the carrying value of the reporting unit. The Company concluded that the estimated fair values of each of the Company's reporting units exceeded its carrying amount of net assets assigned to that reporting unit and, therefore, no further testing was required (Step One). Generally, the more-likely-than-not threshold is a greater than a 50% likelihood that the fair value of a reporting unit is greater than the carrying value. As part of the October 1, 2018 goodwill assessment, the Company engaged a third-party to estimate a discount rate, which is a primary driver in the valuation of the Company's reporting units' fair values. No impairment was recorded as a result of the goodwill impairment test performed. The Company monitors for indicators for goodwill impairment testing between annual tests. No adverse events occurred during the three and six months ended June 30, 2019 that would cause the Company to test goodwill for impairment.

Table of Contents

9. Fair Value Measurement

Fair Value Measurements-Recurring Basis

In determining fair value, the Company uses various valuation approaches within the fair value measurement framework. Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. Applicable accounting literature establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The fair value hierarchy is based on observable or unobservable inputs to valuation techniques that are used to measure fair value. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. Applicable accounting literature defines levels within the hierarchy based on the reliability of inputs as follows:

•Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.


•	Level 2: Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable and market-corroborated inputs, which are derived principally from or corroborated by observable market data.


•	Level 3: Inputs that are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis and the basis of measurement at June 30, 2019 and December 31, 2018:



Fair Value Measurement
	June 30, 2019 (unaudited)							December 31, 2018
(millions)	Level 1		Level 2			Level 3		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	22.3	$	—		$	—	$	39.9	$	—	$	—
Liabilities
Accrued expenses
Interest rate collars	—		(1.0		)	—		—		—		—
Total	$	22.3	$	(1.0	)	$	—	$	39.9	$	—	$	—

Interest Rate Collars

The Company seeks to minimize risks from interest rate fluctuations through the use of interest rate collar contracts and hedge only exposures in the ordinary course of business. Interest rate collars are used to manage interest rate risk associated with our floating rate debt. Effective May 2019, the Company entered into three zero cost interest rate collar contracts with an aggregate notional amount of $222.3 million with maturity dates of April 2022. The notional amount amortizes consistent with the term loan portion of the Senior Credit Facility. See Note 10. Borrowing Arrangements for additional disclosure on interest rate collar contract transactions. The Company accounts for its derivative instruments at fair value. Derivatives held by the Company are designated as hedges of specific exposures at inception, with an expectation that changes in the fair value will essentially offset the change in the underlying exposure. Discontinuance of hedge accounting is required whenever it is subsequently determined that an underlying transaction is not going to occur, with any gains or losses recognized in the Consolidated Statements of Income at such time, with any subsequent changes in fair value recognized currently in earnings.

The fair value of interest rate collars is a Level 2 fair value measurement, based on quoted prices of similar items in active markets. The effective portion of the change in fair value of the interest rate collars is reported in Accumulated other comprehensive income, a component of Stockholders' equity, and is being recognized as an adjustment to interest expense or other (expense) income, respectively, over the same period the related expenses are recognized in earnings. Gains and losses from cash flow hedging instruments reclassified from Accumulated other comprehensive income to earnings are reported as Cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows. The Company did not enter into derivative transactions during the six months ended June 30, 2018.

See Note 15. Comprehensive Income for amount of gain (loss) recognized in Other Comprehensive loss on the interest rate collars. No gain (loss) was reclassified from Accumulated Other Comprehensive loss during the three and six months ended June 30, 2019. No gain (loss) was recognized in income on the interest rate collars resulting from hedge ineffectiveness or exclusion from the assessment of hedge effectiveness.

Table of Contents

The fair value of the interest rate collars as of June 30, 2019 amounted to a $1.0 million liability and is recorded in Accrued expenses within the Condensed Consolidated Balance Sheet. The following table presents summarized information about the Company's interest rate collars:



Interest Rate Collars
June 30, 2019 (unaudited)
		Interest Rate Parameters
(millions)	Maturity Date	Notional Amount		LIBOR Ceiling		LIBOR Floor
Collar 1	April 2022	$	74.1	2.5	%	1.2	%
Collar 2	April 2022	74.1		2.5	%	1.3	%
Collar 3	April 2022	74.1		2.5	%	1.4	%
Total		$	222.3

Nonrecurring Fair Value Measurements

Certain assets are measured at fair value on a nonrecurring basis; that is, the assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Non-financial assets such as goodwill, intangible assets, and leasehold improvements, equipment and construction in progress are subsequently measured at fair value when there is an indicator of impairment and recorded at fair value only when impairment is recognized. The Company assesses the impairment of intangible assets annually or whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. The fair value of its goodwill and intangible assets is not estimated if there is no change in events or circumstances that indicate the carrying amount of an intangible asset may not be recoverable. There were no impairment charges for the six months ended June 30, 2019 and 2018.

Financial Instruments Not Measured at Fair Value

The following table presents the carrying amounts and estimated fair values of financial instruments not measured at fair value in the Condensed Consolidated Balance Sheets at June 30, 2019 and December 31, 2018:



	June 30, 2019 (unaudited)				December 31, 2018
(millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Credit Facility, net of original discount on borrowings and deferred financing costs	$	354.2	$	354.2	$	371.2	$	371.2
Other obligations	$	18.1	$	18.1	$	15.4	$	15.4

The fair value of the Restated Credit Facility and Other obligations approximates the carrying amount due to variable interest rates and would be classified as a Level 2. See Note 10. Borrowing Arrangements, for further information.

10. Borrowing Arrangements

Long-term borrowings, in order of preference, consist of:



		Amount Outstanding
(millions)	Maturity Date	June 30, 2019		December 31, 2018
		(unaudited)
Credit facility, net of original discount on borrowings and deferred financing costs	November 30, 2023	$	354.2	$	371.2
Other borrowings	Various	18.1		15.5
Total obligations under credit facility and other borrowings		372.3		386.7
Less: Current portion of obligations under credit facility and other borrowings		14.0		13.2
Total long-term obligations under credit facility and other borrowings		$	358.3	$	373.5

Table of Contents

Former Amended and Restated Credit Facility

On February 20, 2015, the Company amended and restated its credit facility (the "Former Restated Credit Facility") that permitted aggregate borrowings of $400.0 million consisting of (i) a revolving credit facility of up to $200.0 million at any time outstanding, which includes a $100.0 million sublimit for letters of credit and a $20.0 million sublimit for swing-line loans, and (ii) a term loan facility of $200.0 million. The Former Restated Credit Facility was due to mature on February 20, 2020.

Senior Credit Facility

On November 30, 2018 (the "Closing Date") and in connection with the Acquisition, the Company entered into a credit agreement (the “Credit Agreement”) with Bank of America, N.A. (“Bank of America”), as Administrative Agent, swing-line lender and a letter of credit issuer; Wells Fargo Bank, N.A., as syndication agent; BMO Harris Bank N.A., JPMorgan Chase Bank, N.A., KeyBank National Association and U.S. Bank National Association, as co-documentation agents; Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners; and the lenders party thereto (the “Lenders”). Pursuant to the terms, and subject to the conditions of the Credit Agreement, the Lenders have made available to the Company a new senior secured credit facility (the “Senior Credit Facility”) that permits aggregate borrowings of $550.0 million consisting of (i) a revolving credit facility of up to $325.0 million at any time outstanding, which includes a letter of credit facility that is limited to $100.0 million at any time outstanding, and (ii) a term loan facility of $225.0 million. The Senior Credit Facility matures on November 30, 2023.

The entire amount of the term loan portion of the Senior Credit Facility was drawn by the Company on the Closing Date and is subject to scheduled quarterly amortization of principal in installments equal to 1.25% of the initial aggregate principal amount of such term loan. The Company also borrowed $174.8 million under the revolving credit facility on the Closing Date. The proceeds from these borrowings were used by the Company to pay the purchase price for the Acquisition (See Note 3. Acquisition), to pay other costs and expenses related to the acquisition of Bags and the related financing and to repay in full the obligations under the Former Restated Credit Facility. In addition, proceeds from the Senior Credit Facility may be used to finance working capital, capital expenditures and other acquisitions, payments and general corporate purposes.

Borrowings under the Senior Credit Facility bear interest, at the Company’s option, (i) at a rate per annum based on the Company’s consolidated total debt to EBITDA ratio for the 12-month period ending as of the last day of the immediately preceding fiscal quarter, determined in accordance with the applicable pricing levels set forth in the Credit Agreement (the “Applicable Margin”) for London Interbank Offered Rate (or a comparable or successor rate approved by Bank of America) (“LIBOR”) loans, plus the applicable LIBOR rate or (ii) the Applicable Margin for base rate loans plus the highest of (x) the federal funds rate plus 0.5%, (y) the Bank of America prime rate and (z) a daily rate equal to the applicable LIBOR rate plus 1.0%.

Under the terms of the Credit Agreement, the Company is required to maintain a maximum consolidated total debt to EBITDA ratio of not greater than 4.25:1.0 with certain step-downs described in the Credit Agreement. In addition, the Company is required to maintain a minimum consolidated fixed charge coverage ratio of not less than 3.50:1.0 (with certain step-ups described in the Credit Agreement).

Events of default under the Credit Agreement include failure to pay principal or interest when due, failure to comply with the financial and operational covenants, the occurrence of any cross default event, non-compliance with other loan documents, the occurrence of a change of control event, and bankruptcy and other insolvency events. If an event of default occurs and is continuing, the Administrative Agent can, with the consent of the required Lenders, among others (i) terminate the commitments under the Credit Agreement, (ii) accelerate and require the Company to repay all the outstanding amounts owed under the Credit Agreement, and (iii) require the Company to cash collateralize any outstanding letters of credit.

Each wholly owned domestic subsidiary of the Company (subject to certain exceptions set forth in the Credit Agreement) has guaranteed all existing and future indebtedness and liabilities of the other guarantors and the Company arising under the Credit Agreement. The Company’s obligations under the Credit Agreement and such domestic subsidiaries’ guaranty obligations are secured by substantially all of their respective assets.

The Company is in compliance with the covenants under the Credit Agreement as of June 30, 2019.

At June 30, 2019, the Company had $58.1 million of letters of credit outstanding under the Senior Credit Facility, borrowings against the Senior Credit Facility aggregated to $357.5 million.

The weighted average interest rate on our Senior Credit Facility and Former Restated Credit Facility was 3.8% and 4.0% for the periods ended June 30, 2019 and December 31, 2018, respectively. The rate includes all outstanding LIBOR contracts and letters of credit. The weighted average interest rate on outstanding borrowings, not including letters of credit, was 4.2% and 4.3%, respectively, at June 30, 2019 and December 31, 2018.

In connection with and effective upon the execution and delivery of the Credit Agreement on November 30, 2018, the Company recognized losses on extinguishment of debt relating to debt discount and debt issuance costs. These losses were not significant.

Table of Contents

Interest Rate Collars

In May 2019, the Company entered into three-year interest rate collar contracts with a $222.3 million notional amount. Interest rate collars are used to manage interest rate risk associated with variable interest rate borrowings under the Credit Agreement. The collars establish a range where the Company will pay the counterparties if the one-month LIBOR rate falls below the established floor rate, and the counterparties will pay the Company if the one-month LIBOR rate exceeds the established ceiling rate of 2.5%. The collars settle monthly through the termination date of April 2022. No payments or receipts are exchanged on the interest rate collar contracts unless interest rates rise above or fall below the pre-determined ceiling or floor rates. The notional amount amortizes consistent with the term loan portion of the Senior Credit Facility. These interest rate collars are classified as cash flow hedges, and the Company calculates the effectiveness of the hedge on a monthly basis. See Note 9. Fair Value Measurement for additional disclosure on interest rate collar contract transactions. As of December 31, 2018, the Company had no ongoing derivative transactions.

Subordinated Convertible Debentures

The Company acquired Subordinated Convertible Debentures ("Convertible Debentures") as a result of a prior acquisition. The subordinated debenture holders have the right to redeem the Convertible Debentures for $19.18 per share upon their stated maturity (April 1, 2028) or upon acceleration or earlier repayment of the Convertible Debentures. There were no redemptions of Convertible Debentures during the periods ended June 30, 2019 and December 31, 2018, respectively. The approximate redemption value of the Convertible Debentures outstanding at June 30, 2019 and December 31, 2018 is $1.1 million and $1.1 million, respectively.

11. Share Repurchase Plan

In May 2016, the Company's Board of Directors authorized the Company to repurchase, on the open market, shares of its outstanding common stock in an amount not to exceed $30.0 million in aggregate. Purchases of the Company's common stock may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with Rules 10b-18 and 10b5-1 under the Securities Exchange Act of 1934. The share repurchase program does not obligate the Company to repurchase any particular amount of common stock, and has no fixed termination date.

Under this program, the Company has repurchased 726,899 shares of common stock through June 30, 2019 at an average price of $29.01 per share, resulting in $21.1 million in program-to-date purchases. 348,974 and 421,716 shares were repurchased at an average rate of $32.33 per share, during the three and six months ended June 30, 2019, respectively. No shares were repurchased during the three and six months ended June 30, 2018.

12. Bradley Agreement

The Company entered into a 25-year agreement with the State of Connecticut (“State”) that expires on April 6, 2025, under which it operates the surface parking and 3,500 garage parking spaces at Bradley International Airport (“Bradley”) located in the Hartford, Connecticut metropolitan area.

The parking garage was financed through the issuance of State of Connecticut special facility revenue bonds and provides that the Company deposits, with the trustee for the bondholders, all gross revenues collected from operations of the surface and garage parking. From these gross revenues, the trustee pays debt service on the special facility revenue bonds outstanding, operating and capital maintenance expense of the surface and garage parking facilities, and specific annual guaranteed minimum payments to the state. Principal and interest on the Bradley special facility revenue bonds increase from approximately $3.6 million in contract year 2002 to approximately $4.5 million in contract year 2025. Annual guaranteed minimum payments to the State increase from approximately $8.3 million in contract year 2002 to approximately $13.2 million in contract year 2024. The annual minimum guaranteed payment to the State by the trustee for the twelve months ended December 31, 2019 and 2018 is $12.0 million and was $11.8 million, respectively. All of the cash flow from the parking facilities are pledged to the security of the special facility revenue bonds and are collected and deposited with the bond trustee. Each month the bond trustee makes certain required monthly distributions, which are characterized as “Guaranteed Payments.” To the extent the monthly gross receipts generated by the parking facilities are not sufficient for the trustee to make the required Guaranteed Payments, the Company is obligated to deliver the deficiency amount to the trustee, with such deficiency payments representing interest bearing advances to the trustee. The Company does not directly guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut or the trustee.

The following is the list of Guaranteed Payments:


•	Garage and surface operating expenses,


•	Principal and interest on the special facility revenue bonds,


•	Trustee expenses,


•	Major maintenance and capital improvement deposits, and


•	State minimum guarantee.

Table of Contents

To the extent sufficient funds are available, the trustee is then directed to reimburse the Company for deficiency payments up to the amount of the calculated surplus, with the Company having the right to be repaid the principal amount of any and all deficiency payments, together with actual interest and premium, not to exceed 10% of the initial deficiency payment. The Company calculates and records interest and premium income along with deficiency principal repayments as a reduction of cost of services in the period the associated deficiency repayment is received from the trustee. The Company believes these advances to be fully recoverable as the Bradley Agreement places no time restriction on the Company’s right to reimbursement. The reimbursement of principal, interest and premium will be recognized when received.

The total deficiency repayments (net of payments made) to the State as of June 30, 2019 (unaudited) are as follows:



(millions)	June 30, 2019
Balance as of December 31, 2018	$	3.9
Deficiency payments made	—
Deficiency repayments received	(2.5		)
Balance as of June 30, 2019	$	1.4

The total deficiency repayments (net of payments made), interest and premium received and recorded for the three and six months ended June 30, 2019 and 2018 are as follows:



	Three Months Ended				Six Months Ended
(millions) (unaudited)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Deficiency repayments	$	1.8	$	1.4	$	2.4	$	2.0
Interest	$	0.5	$	0.5	$	0.5	$	0.5
Premium	$	0.2	$	0.1	$	0.2	$	0.2

Deficiency payments made are recorded as an increase in Cost of services - management type contracts and deficiency repayments, interest and premium received are recorded as reductions to Cost of services - management type contracts. The reimbursement of principal, interest and premium are recognized when received.

There were no amounts of estimated deficiency payments accrued as of June 30, 2019 and December 31, 2018, as the Company concluded that the potential for future deficiency payments did not meet the criteria of both probable and estimable.

In addition to the recovery of certain general and administrative expenses incurred, the Bradley Agreement provides for an annual management fee payment, which is based on operating profit tiers. The annual management fee is further apportioned 60% to the Company and 40% to an un-affiliated entity and the annual management fee will be paid to the extent funds are available for the trustee to make distribution, and are paid after Guaranteed Payments (as defined in the Bradley Agreement), and after the repayment of all deficiency payments, including interest and premium. Cumulative management fees of approximately $19.2 million and $18.7 million have not been recognized as of June 30, 2019 and December 31, 2018, respectively, and no management fees were recognized as revenue for the three and six months ended June 30, 2019 and 2018.

13. Stock-Based Compensation

Stock Grants

There were 14,076 and 12,736 stock grants granted during the six months ended June 30, 2019 and 2018, respectively. The Company recognized $0.5 million of stock-based compensation expense related to stock grants for the three and six months ended June 30, 2019 and 2018, respectively.

Restricted Stock Units

During the six months ended June 30, 2019 and 2018, 37,235 and 52,306 restricted stock units were authorized by the Company, respectively. During the six months ended June 30, 2019 and 2018, 7,518 and 57,708 restricted stock units vested, respectively. During the six months ended June 30, 2019 and 2018, 7,978 and 6,456 restricted stock units were forfeited under the Company's Long-Term Incentive Plan, as Amended and Restated (the "Plan") and became available for reissuance, respectively.

Table of Contents

The table below shows the Company's stock-based compensation expense related to the restricted stock units for the three and six months ended June 30, 2019 and 2018, respectively, and is included in General and administrative expenses within the Condensed Consolidated Statements of Income:



	Three Months Ended				Six Months Ended
(millions) (unaudited)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Stock-based compensation expense	$	0.3	$	0.3	$	0.5	$	0.4

As of June 30, 2019, there was $2.3 million of unrecognized stock-based compensation costs related to the restricted stock units that are expected to be recognized over a weighted average remaining period of approximately 2.2 years.

Performance Share Units

In September 2014, the Board of Directors authorized a performance-based incentive program under the Company’s Plan (“Performance-Based Incentive Program”), whereby the Company will issue performance share units to certain executives that represent shares potentially issuable in the future. The objective of the Performance-Based Incentive Program is to link compensation to business performance, encourage ownership of Company stock, retain executive talent, and reward executive performance. The Performance-Based Incentive Program provides participating executives with the opportunity to earn vested common stock if certain performance targets for pre-tax free cash flow are achieved over a three years performance period and recipients satisfy service-based vesting requirements. The stock-based compensation expense associated with unvested performance share units are recognized on a straight-line basis over the shorter of the vesting period or minimum service period and dependent upon the probable outcome of the number of shares that will ultimately be issued based on the achievement of pre-tax free cash flow over the cumulative three years period.

During the six months ended June 30, 2019 and 2018, the Company granted 125,232 and 99,718 performance share units to certain executives, respectively. No performance share units vested during the six months ended June 30, 2019. During the six months ended June 30, 2018, 11,037 performance share units vested related to certain participating executives being eligible for retirement. During the six months ended June 30, 2019 and 2018, 7,940 and 5,719 performance share units were forfeited under the Plan and became available for reissuance, respectively.

The table below shows the Company's stock-based compensation expense related to the Performance-Based Incentive Program for the three and six months ended June 30, 2019 and 2018, respectively, and is included in General and administrative expenses within the Condensed Consolidated Statements of Income:



	Three Months Ended				Six Months Ended
(millions) (unaudited)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Stock-based compensation expense	$	0.6	$	0.6	$	0.8	$	1.1

Future compensation expense for currently outstanding awards under the Performance-Based Incentive Program could reach a maximum of $16.3 million. Stock-based compensation for the Performance-Based Incentive Program is expected to be recognized over a weighted average period of 2.2 years.

Table of Contents

14. Net Income per Common Share

Basic net income per share is computed by dividing net income by the weighted daily average number of shares of common stock outstanding during the period. Diluted net income per share is based upon the weighted daily average number of shares of common stock outstanding for the period plus dilutive potential common shares, including stock options and restricted stock units using the treasury-stock method.

A reconciliation of the weighted average basic common shares outstanding to the weighted average diluted common shares outstanding is as follows:



	Three Months Ended				Six Months Ended
(millions, except share and per share data) (unaudited)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Net income attributable to SP Plus Corporation	$	15.2	$	15.3	$	25.8	$	30.6
Basic weighted average common shares outstanding	22,382,139		22,370,923		22,445,825		22,335,835
Dilutive impact of share-based awards	150,074		273,961		154,282		261,296
Diluted weighted average common shares outstanding	22,532,213		22,644,884		22,600,107		22,597,131
Net income per common share
Basic	$	0.68	$	0.68	$	1.15	$	1.37
Diluted	$	0.68	$	0.68	$	1.14	$	1.36

For the three and six months ended June 30, 2019 and 2018, unvested performance share units were excluded from the computation of weighted average diluted common share outstanding because the number of shares ultimately issuable is contingent on the Company's performance goals, which were not achieved as of the reporting date.

There are no additional securities that could dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share, other than those disclosed.

15. Comprehensive Income

Comprehensive income consists of the following components, net of tax:



	Three Months Ended						Six Months Ended
(millions) (unaudited)	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Net income	$	16.3		$	16.2		$	27.2		$	32.1
Effective portion of unrealized loss on cash flow hedge	(0.8		)	—			(0.8		)	—
Foreign currency translation	(0.1		)	(0.2		)	0.1			(0.6		)
Comprehensive income	15.4			16.0			26.5			31.5
Less: Comprehensive income attributable to noncontrolling interest	1.1			0.9			1.4			1.5
Comprehensive income attributable to SP Plus Corporation	$	14.3		$	15.1		$	25.1		$	30.0

Accumulated other comprehensive loss is comprised of foreign currency translation adjustments. The components of changes in accumulated comprehensive loss, net of tax, for the six months ended June 30, 2019 were as follows:



(millions) (unaudited)	Foreign Currency Translation Adjustments			Effective Portion of Unrealized Loss on Cash Flow Hedge			Total Accumulated Other Comprehensive Loss
Balance as of December 31, 2018	$	(2.4	)	$	—		$	(2.4	)
Change in other comprehensive loss	0.2			—			0.2
Balance as of March 31, 2019	$	(2.2	)	$	—		$	(2.2	)
Change in other comprehensive loss	$	(0.1	)	$	(0.8	)	(0.9		)
Balance as of June 30, 2019	$	(2.3	)	$	(0.8	)	$	(3.1	)

Table of Contents

16. Income Taxes

For the three months ended June 30, 2019, the Company recognized an income tax expense of $5.8 million on pre-tax earnings of $22.1 million compared to $6.0 million income tax expense on pre-tax earnings of $22.2 million for the three months ended June 30, 2018. For the six months ended June 30, 2019, the Company recognized an income tax expense of $8.9 million on pre-tax earnings of $36.1 million compared to $11.3 million income tax expense on pre-tax earnings of $43.4 million for the six months ended June 30, 2018. The effective tax rate was approximately 24.7% for the six months ended June 30, 2019 compared to 26.1% for the six months ended June 30, 2018. The effective tax rate for the six months ended June 30, 2019 decreased primarily due to an increase in estimated income tax credits and a reduction in state taxes.

As of June 30, 2019, the Company has not identified any uncertain tax positions that would have a material impact on the Company’s financial position. The Company recognizes potential interest and penalties related to uncertain tax positions, if any, in income tax expense.

The tax years that remain subject to examination for the Company’s major tax jurisdictions at June 30, 2019 are shown below:

2015 – 2018 United States — federal income tax

2012 – 2018 United States — state and local income tax

2014 – 2018 Canada and Puerto Rico

17. Business Unit Segment Information

Segment information is presented in accordance with a “management approach,” which designates the internal reporting used by the Company's Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance as the source of the Company’s reportable segments. The Company’s segments are organized in a manner consistent with which discrete financial information is available and evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance.

An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses, and about which separate financial information is regularly evaluated by the CODM. The CODM is the Company’s chief executive officer.

Each of the operating segments are directly responsible for revenue and expenses related to their operations including direct segment administrative costs. Finance, information technology, human resources, and legal are shared functions that are not allocated back to the two operating segments. The CODM assesses the performance of each operating segment using information about its revenue and gross profit as its primary measure of performance, but does not evaluate segments using discrete asset information. There are no inter-segment transactions and the Company does not allocate interest and other income, interest expense, depreciation and amortization or taxes to operating segments. The accounting policies for segment reporting are the same as for the Company as a whole.

The operating segments are internally reported to the Company's CODM as Segment One (Commercial) and Segment Two (Aviation).

•

Segment One (Commercial) encompasses our services in healthcare facilities, municipalities, including meter revenue collection and enforcement services, government facilities, hotels, commercial real estate, residential communities, retail, colleges and universities, as well as ancillary services such as shuttle and ground transportation services, valet services, taxi and livery dispatch services and event planning, including shuttle and transportation services.


•	Segment Two (Aviation) encompasses our services in aviation (i.e., airports, airline and certain hospitality clients with baggage and parking services) as well as ancillary services, which include shuttle and ground transportation services, valet services, baggage handling, baggage repair and replacement, remote airline check-in services, wheelchair assist services and other services.


•	"Other" consists of ancillary revenue that is not specifically identifiable to Segments One or Two and certain unallocated items, such as and including prior year insurance reserve adjustments/costs and other corporate items.

The business is managed based on segments administered by executive officers.

Table of Contents

The following is a summary of revenues and gross profit by operating segment for the three and six months ended June 30, 2019 and 2018:



	Three Months Ended										Six Months Ended
(millions) (unaudited)	June 30, 2019			Gross Margin %		June 30, 2018			Gross Margin %		June 30, 2019			Gross Margin %		June 30, 2018			Gross Margin %
Services Revenue
Segment One
Lease type contracts	$	96.9				$	100.2				$	187.4				$	193.3
Management type contracts	61.1					62.1					128.7					131.7
Total Segment One	158.0					162.3					316.1					325.0
Segment Two
Lease type contracts	8.2					7.0					15.3					13.4
Management type contracts	66.7					22.8					129.9					45.1
Total Segment Two	74.9					29.8					145.2					58.5
Other
Lease type contracts	0.1					0.2					0.3					0.2
Management type contracts	2.1					2.8					4.2					5.4
Total Other	2.2					3.0					4.5					5.6
Reimbursed management type contract revenue	179.1					167.1					357.8					339.9
Total Services Revenue	$	414.2				$	362.2				$	823.6				$	729.0
Gross Profit
Segment One
Lease type contracts	$	9.8		10	%	$	9.6		10	%	$	14.4		8	%	$	12.0		6	%
Management type contracts	23.5			39	%	23.9			38	%	47.3			37	%	47.6			36	%
Total Segment One	33.3					33.5					61.7					59.6
Segment Two
Lease type contracts	2.5			31	%	2.1			30	%	4.0			26	%	3.5			26	%
Management type contracts	19.6			29	%	7.7			34	%	35.3			27	%	13.6			30	%
Total Segment Two	22.1					9.8					39.3					17.1
Other
Lease type contracts	1.1			1,100	%	1.2			600	%	3.1			1,033	%	2.4			1,200	%
Management type contracts	5.4			257	%	6.6			236	%	11.0			262	%	11.5			213	%
Total Other	6.5					7.8					14.1					13.9
Total gross profit	$	61.9				$	51.1				$	115.1				$	90.6
General and administrative expenses	27.7					22.3					54.8					44.6
General and administrative expense percentage of gross profit	45		%			44		%			48		%			49		%
Depreciation and amortization	7.3					4.5					14.5					8.5
Operating income	26.9					24.3					45.8					37.5
Other expenses (income)
Interest expense	4.9					2.2					9.9					4.3
Interest income	(0.1		)			(0.1		)			(0.2		)			(0.2		)
Equity earnings from investment in unconsolidated entity	—					—					—					(10.0		)
Total other expenses (income)	4.8					2.1					9.7					(5.9		)
Earnings before income taxes	22.1					22.2					36.1					43.4
Income tax expense	5.8					6.0					8.9					11.3
Net income	16.3					16.2					27.2					32.1
Less: Net income attributable to noncontrolling interest	1.1					0.9					1.4					1.5
Net income attributable to SP Plus Corporation	$	15.2				$	15.3				$	25.8				$	30.6

Table of Contents

18. Subsequent Events

In July 2019, the Company's Board of Director's authorized a new program to repurchase, on the open market, shares of its outstanding common stock in an amount not to exceed $50.0 million in aggregate. Purchases of the Company's common stock may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with Rules 10b-18 and 10b5-1 under the Securities Exchange Act of 1934 at time and prices considered to be appropriate at the discretion of the Company. The share repurchase program does not obligate the Company to repurchase any particular amount of common stock, has no fixed termination date and the program may be suspended at any time at the Company's discretion.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations should be read in conjunction with the condensed consolidated financial statements and the notes thereto contained in this Quarterly Report on Form 10-Q and the condensed consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

Important Information Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q is being filed by SP Plus Corporation (“we”, “SP Plus” or the “Company”) with the Securities and Exchange Commission (“SEC”) and contains forward-looking statements. These statements are typically accompanied by the words “expect,” “estimate,” “intend”, “will,” “predict,” “project,” “may,” “should,” “could,” “believe,” “would,” “might,” “anticipate,” or words of similar terms and phrases, but such words, terms and phrases are not the exclusive means of identifying such statements. These expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. These forward looking statements are made based on management’s expectations, beliefs and projections concerning future events and are subject to uncertainties and factors relating to operations and the business environment, all of which are difficult to predict and many of which are beyond management’s control. These forward looking statements are not guarantees of future performance and there can be no assurance that our expectations, beliefs and projections will be realized.

Although we believe there is a reasonable basis for the forward-looking statements, our actual results could be materially different. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth on our description of risk factors in Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and except as expressly required by the federal securities laws, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances, future events or for any other reason.

Explanatory Note

On November 30, 2018, we completed the acquisition of Bags and our consolidated results of operations for the three and six months ended June 30, 2019 includes the results of operations related to Bags. Our consolidated operations for the three and six months ended June 30, 2018 do not include amounts related to the Bags results of operations. See Note 3. Acquisition, which is included in Part I, Item 1. "Financial Statements" for further discussion of the Bags acquisition.

Overview

Our Business

We provide parking management, ground transportation services, baggage services and other ancillary services to commercial, hospitality, institutional, municipal and governmental, and aviation clients across the United States, Puerto Rico and Canada. Our services include on-site parking management, valet parking, ground transportation services, facility maintenance, event logistics, baggage handling services, remote airline check-in services, security services, municipal meter revenue collection and enforcement services and consulting services. We schedule and supervise service personnel as well as provide customer service, marketing, accounting and revenue control functions necessary to provide such services. We typically enter into contractual relationships with property owners or managers as opposed to owning facilities.

We operate our clients’ properties through two types of arrangements: management type contracts and lease type contracts. Under a management type contract, we typically receive a fixed and/or variable monthly fee for providing our services, and we may also receive an incentive fee based on the achievement of certain performance objectives. We also receive fees for ancillary services. Typically, all of the underlying revenue and expenses under a standard management type contract flow through to our client rather than to us. However, some management type contracts, which are referred to as “reverse” management type contracts, usually provide for larger management fees and require us to pay various costs. Under a lease type contract, we generally pay to the client either a fixed annual rent, a percentage of gross customer collections, or a combination of both. Under a lease type contract, we collect all revenue and are responsible for most operating expenses, but typically are not responsible for major maintenance, capital expenditures or real estate taxes. Margins for lease type contracts vary significantly, not only due to operating performance, but also due to variability of parking rates in different cities and varying space utilization by parking facility type and location. As of June 30, 2019, we operated approximately 80% of our locations under management type contracts and approximately 20% under lease type contracts.

Table of Contents

In evaluating our financial condition and operating performance, management’s primary focus is on our gross profit and total general and administrative expense. Revenue from lease type contracts includes all gross customer collections derived from our leased locations (net of local parking taxes), whereas revenue from management type contracts only includes our contractually agreed upon management fees and amounts attributable to ancillary services. Gross customer collections at facilities under management type contracts, therefore, are not included in our revenue. Revenue from lease type contracts also includes a reduction of Services revenue - lease type contracts pursuant to ASU No. 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services, which requires rental expense be presented as a reduction of Services revenue - lease type contracts for those facilities (and corresponding contracts) that meet the criteria and definition of a service concession arrangement. Accordingly, while a change in the proportion of our operating agreements that are structured as lease type contracts versus management type contracts may cause significant fluctuations in reported revenue and expense of parking services, that change will not artificially affect our gross profit. For example, as of June 30, 2019, approximately 80% of our business was operating under management type contracts and 81% of our gross profit for the six months ended June 30, 2019 was derived from management type contracts. Only 56% of total revenue (excluding reimbursed management type contract revenue), however, was from management type contracts because under those contracts the revenue collected from parking customers belongs to our clients. Therefore, gross profit and total general and administrative expense, rather than revenue, are management’s primary focus.

Bags Acquisition

On November 30, 2018, we acquired the outstanding shares of Baggage Airline Guest Services, Inc., Home Serv Delivery, LLC, and their subsidiaries and affiliates (collectively, "Bags"), for an all-cash purchase price of $277.9 million, net of $5.9 million of cash acquired. Bags is a leading provider of baggage services, remote airline check-in, and other related services, primarily to airline, airport and hospitality clients. Bags provides these services by combining exceptional customer service with innovative technologies. Based in Orlando, Florida, Bags operates in over 250 cities in North America with approximately 3,000 employees. Its clients include major airlines, airports, sea ports, cruise lines, and leading hotels and resorts. Bags handles more than 5.0 million checked bags annually.

General Business Trends

We believe that sophisticated clients (which also include property owners) recognize the potential for parking services, parking management, ground transportation services, baggage handling and other ancillary services to be a profit generator and/or a service differentiator to their customers. By outsourcing these services, they are able to capture additional profit and improve customer experience by leveraging the unique operational skills and controls that an experienced services company can offer. Our ability to consistently deliver a uniformly high level of services to our clients, including the use of various technological enhancements, allows us to maximize the profit and/or customer experience to our clients and improves our ability to win contracts and retain existing clients. Our focus on customer service and satisfaction is a key driver of our high retention rate, which was approximately 90% for both twelve-month periods ended June 30, 2019 and 2018, respectively. This retention rate captures facilities in Segment One (Commercial).

Summary of Commercial Segment Facilities

The following table reflects our Commercial Segment facilities (by contractual type) operated at the end of the years indicated:



	June 30, 2019	December 31, 2018	June 30, 2018
Leased facilities	625	628	631
Managed facilities	2,513	2,514	2,601
Total Commercial Segment facilities⁽¹⁾	3,138	3,142	3,232

⁽¹⁾ Includes partial ownership in one leased facility.

Revenue

We recognize services revenue from lease and management type contracts as the related services are provided. Substantially all of our revenue comes from the following two sources:

Services revenue—lease type contracts. Services revenue related to lease type contracts consists of all revenue received at a lease type locations, including gross receipts (net of local taxes), consulting and real estate development fees, gains on sales of contracts and payments for exercising termination rights.

Table of Contents

Services revenue—management type contracts. Management type contract revenue consists of management fees, including fixed, variable and/or performance-based fees, and amounts attributable to ancillary services such as accounting, equipment leasing, baggage services, payments received for exercising termination rights, consulting, developmental fees, gains on sales of contracts, insurance and other value-added services with respect to management type contracts. We believe we generally purchase required insurance at lower rates than our clients can obtain on their own because we effectively self-insure for all liability and workers' compensation and health care claims by maintaining a large per-claim deductible. As a result, we have generated operating income on the insurance provided under our management type contracts by focusing on our risk management efforts and controlling losses. Management type contract revenues do not include gross customer collections at managed type contracts as these revenues belong to the client rather than to us. Management type contracts generally provide us with a management fee regardless of the operating performance of the underlying management type contract.

Reimbursed Management Type Contract Revenue

Reimbursed management type contract revenue consists of the direct reimbursement from the property owner for operating expenses incurred under a management type contract, which are reflected in our revenue.

Cost of Services

Our cost of services consists of the following:

Cost of services—lease type contracts. The cost of services under a lease type arrangement consists of contractual rents or fees paid to the client and all operating expenses incurred in connection with operating the leased facility. Contractual rents or fees paid to the client are generally based on either a fixed contractual amount or a percentage of gross revenue or a combination thereof. Generally, under a lease type arrangement we are not responsible for major capital expenditures or real estate taxes.

Cost of services—management type contracts. The cost of services under a management type contract is generally the responsibility of the client. As a result, these costs are not included in our results of operations. However, our reverse management type contracts, which typically provide for larger management fees, do require us to pay for certain costs and these costs are included in results of operations.

Reimbursed Management Type Contract Expense

Reimbursed management type contract expense consists of direct reimbursed costs incurred on behalf of property owners under a management type contract, which are reflected in our cost of parking services.

Gross Profit

Gross profit equals our revenue less the cost of generating such revenue. This is the key metric we use to examine our performance because it captures the underlying economic benefit to us of both lease and management type contracts.

General and Administrative Expenses

General and administrative expenses include salaries, wages, payroll taxes, insurance, travel and office related expenses for our headquarters, field offices, supervisory employees, and board of directors.

Depreciation and Amortization

Depreciation is determined using a straight-line method over the estimated useful lives of the various asset classes, or in the case of leasehold improvements, over the initial term of the operating lease or its useful life, whichever is shorter. Intangible assets determined to have finite lives are amortized over their remaining estimated useful life.

Table of Contents

Results of Operations

Segments

An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses, and about which separate financial information is regularly evaluated by our chief operating decision maker (“CODM”), in deciding how to allocate resources. Our CODM is our chief executive officer.

The operating segments are internally reported to our CODM as Segment One (Commercial) and Segment Two (Aviation).

•

Segment One (Commercial) encompasses our services in healthcare facilities, municipalities, including meter revenue collection and enforcement services, government facilities, hotels, commercial real estate, residential communities, retail, colleges and universities, as well as ancillary services such as ground transportation services, valet services, taxi and livery dispatch services and event planning, including shuttle and transportation services.


•	Segment Two (Aviation) encompasses our services in aviation (e.g., airports, airline and certain hospitality clients with baggage and parking services) as well as ancillary services, which includes ground transportation services, valet services, baggage handling, baggage repair and replacement, remote airline check-in services and other services.


•	"Other" consists of ancillary revenue that is not specifically identifiable to Segments One or Two and certain unallocated items, such as and including prior year insurance reserve adjustments/costs and other corporate items.

The following tables are a summary of revenues (excluding reimbursed management type contract revenue), cost of services and gross profit by segment for the three months ended June 30, 2019 and 2018:

Three Months Ended June 30, 2019 Compared to Three Months June 30, 2018

Segment revenue information is summarized as follows:



	Three Months Ended June 30,
	Segment One				Segment Two				Other				Total				Variance
(millions) (unaudited)	2019		2018		2019		2018		2019		2018		2019		2018		Amount			%
Lease type contract revenue:
New/acquired business	$	2.7	$	0.5	$	0.9	$	—	$	—	$	—	$	3.6	$	0.5	$	3.1		620.0	%
Expired business	0.5		8.2		—		—		—		—		0.5		8.2		(7.7		)	(93.9	)%
Existing business	91.4		88.7		7.3		7.0		0.1		0.2		98.8		95.9		2.9			3.0	%
Conversions	2.3		2.8		—		—		—		—		2.3		2.8		(0.5		)	(17.9	)%
Total lease type contract revenue	$	96.9	$	100.2	$	8.2	$	7.0	$	0.1	$	0.2	$	105.2	$	107.4	$	(2.2	)	(2.0	)%
Management type contract revenue:
New/acquired business	$	5.7	$	0.9	$	45.4	$	0.2	$	—	$	—	$	51.1	$	1.1	$	50.0		4,545.5	%
Expired business	0.7		6.9		—		0.3		—		—		0.7		7.2		(6.5		)	(90.3	)%
Existing business	54.6		54.2		21.3		22.3		2.1		2.8		78.0		79.3		(1.3		)	(1.6	)%
Conversions	0.1		0.1		—		—		—		—		0.1		0.1		—			—	%
Total management type contract revenue	$	61.1	$	62.1	$	66.7	$	22.8	$	2.1	$	2.8	$	129.9	$	87.7	$	42.2		48.1	%

Revenue associated with existing business represents business that has been operating for at least one year and operating for the entire period in the comparative period being presented. Revenue associated with expired business relates to contracts that have expired, however, we were operating the location in the comparative period presented.

Services revenue—lease type contracts. Lease type contract revenue decreased $2.2 million, or 2.0%, to $105.2 million for the three months ended June 30, 2019, compared to $107.4 million for the three months ended June 30, 2018. The decrease in lease type contract revenue resulted primarily from a decrease of $7.7 million from expired business and $0.5 million from locations that converted from management type contracts during the periods presented, partially offset by increases of $2.9 million from existing business and $3.1 million from new/acquired business. Existing business revenue increased $2.9 million, or 3.0%, primarily due to transient revenue.

From a reporting segment perspective, lease type contract revenue decreased primarily due to expired business in Segment One, existing business in Other and conversions in Segment One, partially offset by increases in new/acquired business in Segment One and Two, existing business in Segment One and Two. The Other amounts in existing business represent revenues not specifically identifiable to Segments One or Two.

Table of Contents

Services revenue—management type contracts. Management type contract revenue increased $42.2 million, or 48.1%, to $129.9 million for the three months ended June 30, 2019, compared to $87.7 million for the three months ended June 30, 2018. The increase in management type contract revenue resulted primarily from an increase of $50.0 million from new/acquired business, primarily due to the Bags acquisition, partially offset by a decrease of $6.5 million from expired business and $1.3 million from existing business. Existing business decreased $1.3 million, or 1.6%, primarily due to change in contract terms for certain management type contracts, whereby the contract terms converted from a "reverse" management type contract to a management type contract, which typically has lower management fees from the facility owner but do not require us to pay certain operating costs associated with the facilities operation, partially offset by increased management fees.

From a reporting segment perspective, management type contract revenue increased primarily due to increases from new/acquired business in Segment One and Two and existing business in Segment One, partially offset by decreases in revenue from expired business in Segment One and Two and existing business in Segment Two and Other. The Other amounts in existing business represent revenues not specifically identifiable to Segment One or Two.

Reimbursed management type contract revenue. Reimbursed management type contract revenue increased $12.0 million, or 7.2%, to $179.1 million for the three months ended June 30, 2019, compared to $167.1 million for the three months ended June 30, 2018. This increase resulted from an increase in reimbursements for costs incurred on behalf of owners.

Segment cost of services information is summarized as follows:



	Three Months Ended June 30,
	Segment One				Segment Two				Other						Total				Variance
(millions) (unaudited)	2019		2018		2019		2018		2019			2018			2019		2018		Amount			%
Cost of services lease type contracts:
New/acquired business	$	2.4	$	0.4	$	0.7	$	—	$	—		$	—		$	3.1	$	0.4	$	2.7		675.0	%
Expired business	0.5		7.4		—		—		—			—			0.5		7.4		(6.9		)	(93.2	)%
Existing business	82.1		80.3		5.0		4.9		(1.0		)	(1.0		)	86.1		84.2		1.9			2.3	%
Conversions	2.1		2.5		—		—		—			—			2.1		2.5		(0.4		)	(16.0	)%
Total cost of services lease type contracts	$	87.1	$	90.6	$	5.7	$	4.9	$	(1.0	)	$	(1.0	)	$	91.8	$	94.5	$	(2.7	)	(2.9	)%
Cost of services management type contracts:
New/acquired business	$	2.9	$	0.2	$	34.5	$	—	$	—		$	—		$	37.4	$	0.2	$	37.2		18,600.0	%
Expired business	0.7		4.6		—		0.1		—			—			0.7		4.7		(4.0		)	(85.1	)%
Existing business	33.9		33.4		12.6		15.0		(3.3		)	(3.8		)	43.2		44.6		(1.4		)	(3.1	)%
Conversions	0.1		—		—		—		—			—			0.1		—		0.1			—	%
Total cost of services management type contracts	$	37.6	$	38.2	$	47.1	$	15.1	$	(3.3	)	$	(3.8	)	$	81.4	$	49.5	$	31.9		64.4	%

Cost of services associated with existing business represents locations that have been operating for at least one year and operating for the entire period in the comparative period being presented. Cost of services associated with expired business relates to contacts that have expired, however, we were operating the location in the comparative period presented.

Cost of services—lease type contracts. Cost of services for lease type contracts decreased $2.7 million, or 2.9%, to $91.8 million for the three months ended June 30, 2019, compared to $94.5 million for the three months ended June 30, 2018. The decrease in cost of services for lease type contracts resulted primarily from a decrease of $6.9 million from expired business and a decrease from locations that converted from management type contracts during the periods presented of $0.4 million, partially offset by increases of $2.7 million from new/acquired business and $1.9 million from existing business. Existing business costs increased $1.9 million, or 2.3%, primarily due to an increase in rent expense as a result of higher revenues for existing business and an increase in compensation and benefit costs, partially offset by a decrease in overall net operating costs.

From a reporting segment perspective, cost of services for lease type contracts decreased primarily from expired business in Segment One and conversions in Segment One, partially offset by new/acquired business in Segment One and Two and existing business in Segment One and Two.

Table of Contents

Cost of services—management type contracts. Cost of services for management type contracts increased $31.9 million, or 64.4%, to $81.4 million for the three months ended June 30, 2019, compared to $49.5 million for the three months ended June 30, 2018. The increase in cost of services for management type contracts resulted primarily from increases of $37.2 million from new/acquired business, primarily due to the Bags acquisition, and $0.1 million from locations that converted from lease type contracts during the periods presented, partially offset by a decrease of $4.0 million from expired business and $1.4 million from existing business. Existing business decreased $1.4 million, or 3.1%, primarily due to a decrease in overall net operating costs, change in contract terms for certain management type contracts, whereby the contract terms converted from a "reverse" management type contract to a management type contract, which typically has lower management fees from the facility owner but do not require us to pay certain operating costs associated with the facilities operation, and increased management fees, partially offset by an increase in compensation and benefit costs.

From a reporting segment perspective, cost of services for management type contracts increased primarily due to new/acquired business in Segment One and Two, existing business in Segment One and Other, and conversions in Segment One, partially offset by a decrease in expired business in Segment One and Two, and existing business in Segment Two. The Other segment amounts in existing business represent costs not specifically identifiable to Segment One or Two.

Reimbursed management type contract expense. Reimbursed management type contract expense increased $12.0 million, or 7.2%, to $179.1 million for the three months ended June 30, 2019, compared to $167.1 million for the three months ended June 30, 2018. This increase resulted from an increase in reimbursements for costs incurred on behalf of owners.

Segment gross profit/gross profit percentage information is summarized as follows:



	Three Months Ended June 30,
	Segment One						Segment Two						Other						Total						Variance
(millions) (unaudited)	2019			2018			2019			2018			2019			2018			2019			2018			Amount			%
Gross profit lease type contracts:
New/acquired business	$	0.3		$	0.1		$	0.2		$	—		$	—		$	—		$	0.5		$	0.1		$	0.4		400.0	%
Expired business	—			0.8			—			—			—			—			—			0.8			(0.8		)	(100.0	)%
Existing business	9.3			8.4			2.3			2.1			1.1			1.2			12.7			11.7			1.0			8.5	%
Conversions	0.2			0.3			—			—			—			—			0.2			0.3			(0.1		)	(33.3	)%
Total gross profit lease type contracts	$	9.8		$	9.6		$	2.5		$	2.1		$	1.1		$	1.2		$	13.4		$	12.9		$	0.5		3.9	%
	(Percentages)
Gross profit percentage lease type contracts:
New/acquired business	11.1		%	20.0		%	22.2		%	—		%	—		%	—		%	13.9		%	20.0		%
Expired business	—		%	9.8		%	—		%	—		%	—		%	—		%	—		%	9.8		%
Existing business	10.2		%	9.5		%	31.5		%	30.0		%	1,100.0		%	600.0		%	12.9		%	12.2		%
Conversions	8.7		%	10.7		%	—		%	—		%	—		%	—		%	8.7		%	10.7		%
Total gross profit percentage	10.1		%	9.6		%	30.5		%	30.0		%	1,100.0		%	—		%	12.7		%	12.0		%
Gross profit management type contracts:
New/acquired business	$	2.8		$	0.7		$	10.9		$	0.2		$	—		$	—		$	13.7		$	0.9		$	12.8		1,422.2	%
Expired business	—			2.3			—			0.2			—			—			—			2.5			(2.5		)	(100.0	)%
Existing business	20.7			20.8			8.7			7.3			5.4			6.6			34.8			34.7			0.1			0.3	%
Conversions	—			0.1			—			—			—			—			—			0.1			(0.1		)	(100.0	)%
Total gross profit management type contracts	$	23.5		$	23.9		$	19.6		$	7.7		$	5.4		$	6.6		$	48.5		$	38.2		$	10.3		27.0	%
	(Percentages)
Gross profit percentage management type contracts:
New/acquired business	49.1		%	77.8		%	24.0		%	100.0		%	—		%	—		%	26.8		%	81.8		%
Expired business	—		%	33.3		%	—		%	66.7		%	—		%	—		%	—		%	34.7		%
Existing business	37.9		%	38.4		%	40.8		%	32.7		%	257.1		%	235.7		%	44.6		%	43.8		%
Conversions	—		%	100.0		%	—		%	—		%	—		%	—		%	—		%	100.0		%
Total gross profit percentage	38.5		%	38.5		%	29.4		%	33.8		%	257.1		%	235.7		%	37.3		%	43.6		%

Gross profit associated with existing business represents locations that have been operating for at least one year and operating for the entire period in the comparative period being presented. Gross profit associated with expired business relates to contracts that have expired, however, we were operating the location in the comparative period presented.

Table of Contents

Gross profit—lease type contracts. Gross profit for lease type contracts increased $0.5 million, or 3.9%, to $13.4 million for the three months ended June 30, 2019, compared to $12.9 million for three months ended June 30, 2018. Gross profit percentage for lease type contracts increased to 12.7% for the three months ended June 30, 2019, compared to 12.0% for the three months ended June 30, 2018. Gross profit for lease type contracts increased as a result of increases in gross profit for existing business and new/acquired business, partially offset by decreases in expired business and locations that converted from management type contracts during the periods presented. Gross profit for existing business increased primarily due to increases in fees for transient revenue and a decrease in overall net operating costs, partially offset by an increase in compensation and benefit costs.

From a reporting segment perspective, gross profit for lease type contracts increased primarily due to increases in new/acquired business in Segment One and Two and existing business in Segment One and Two, partially offset by decreases in gross profit from expired business in Segment One, existing business in Other, and conversions in Segment One.

Gross profit—management type contracts. Gross profit for management type contracts increased $10.3 million, or 27.0%, to $48.5 million for the three months ended June 30, 2019, compared to $38.2 million for the three months ended June 30, 2018. Gross profit percentage for management type contracts decreased to 37.3% for three months ended June 30, 2019, compared to 43.6% for three months ended June 30, 2018. Gross profit for management type contracts increased as a result of increases in gross profit for new/acquired business, primarily due to the Bags acquisition, and existing business, partially offset by a decrease in expired business and locations that converted from lease type contracts during the periods presented. Existing business gross profit increased $0.1 million, or 0.3%, primarily due to decreases in overall net operating costs, and by increased management fees.

From a reporting segment perspective, gross profit for management type contracts increased primarily due to new/acquired business in Segment One and Two and existing business in Segment Two, partially offset by decreases in expired business in Segment One and Two, existing business in Segment One and Other, and conversions in Segment One.

General and administrative expenses. General and administrative expenses increased $5.4 million, or 24.2%, to $27.7 million for the three months ended June 30, 2019, compared to $22.3 million for the three months ended June 30, 2018. The increase in General and administrative expenses was primarily related to the Bags acquisition, a $1.7 million cost recovery from a vendor partner recognized in the second quarter of 2018, and higher compensation and benefit costs, including costs associated with our performance-based compensation program.

Depreciation and amortization. Depreciation and amortization increased $2.8 million, or 62.2%, to $7.3 million for the three months ended June 30, 2019, compared to $4.5 million for the three months ended June 30, 2018. This increase was primarily a result of additional amortization relating to intangible assets recognized in the acquisition of Bags.

Interest expense. Interest expense increased $2.7 million, or 122.7%, to $4.9 million for the three months ended June 30, 2019, compared to $2.2 million for the three months ended June 30, 2018. This increase resulted primarily from an increase in borrowings used to fund the acquisition of Bags on November 30, 2018.

Interest income. Interest income was $0.1 million for the three months ended June 30, 2019 and 2018.

Equity in earnings from investment in unconsolidated entity. There were no Equity in earnings from investment in unconsolidated entity for the three months ended June 30, 2019 and 2018.

Income tax expense. Income tax expense decreased $0.2 million to $5.8 million for the three months ended June 30, 2019, as compared to $6.0 million for the three months ended June 30, 2018. Our effective tax rate was 26.2% for the three months ended June 30, 2019 and 27.0% for the three months ended June 30, 2018. The effective tax rate for the three months ended June 30, 2019 decreased primarily due to do to an increase in estimated income tax credits and a reduction in state taxes.

Table of Contents

Six Months Ended June 30, 2019 Compared to Six Months June 30, 2018

Segment revenue information is summarized as follows:



	Six Months Ended June 30,
	Segment One				Segment Two				Other				Total				Variance
(millions) (unaudited)	2019		2018		2019		2018		2019		2018		2019		2018		Amount			%
Lease type contract revenue:
New/acquired business	$	4.7	$	0.6	$	1.3	$	—	$	—	$	—	$	6.0	$	0.6	$	5.4		900.0	%
Expired business	2.1		17.0		—		—		—		—		2.1		17.0		(14.9		)	(87.6	)%
Existing business	175.7		170.8		14.0		13.4		0.3		0.2		190.0		184.4		5.6			3.0	%
Conversions	4.9		4.9		—		—		—		—		4.9		4.9		—			—	%
Total lease type contract revenue	$	187.4	$	193.3	$	15.3	$	13.4	$	0.3	$	0.2	$	203.0	$	206.9	$	(3.9	)	(1.9	)%
Management type contract revenue:
New/acquired business	$	10.1	$	1.2	$	88.2	$	0.3	$	—	$	—	$	98.3	$	1.5	$	96.8		6,453.3	%
Expired business	2.3		14.8		—		0.7		—		—		2.3		15.5		(13.2		)	(85.2	)%
Existing business	116.0		115.4		41.7		44.1		4.2		5.4		161.9		164.9		(3.0		)	(1.8	)%
Conversions	0.3		0.3		—		—		—		—		0.3		0.3		—			—	%
Total management type contract revenue	$	128.7	$	131.7	$	129.9	$	45.1	$	4.2	$	5.4	$	262.8	$	182.2	$	80.6		44.2	%

Services revenue—lease type contracts. Lease type contracts revenue decreased $3.9 million, or 1.9%, to $203.0 million for the six months ended June 30, 2019, compared to $206.9 million for the six months ended June 30, 2018. The decrease in lease type contracts revenue resulted primarily from decreases of $14.9 million from expired business, partially offset by an increase of $5.6 million from existing business and $5.4 million from new/acquired business. Existing business revenue increased $5.6 million, or 3.0%, primarily due to an increase in fees for transient revenue.

From a reporting segment perspective, lease type contract revenue decreased primarily due to expired business in Segment One, partially offset by increases from existing business in Segment One, Two, and Other and new/acquired business in Segment One and Two. The Other segment amounts in existing business represent revenue not specifically identifiable to Segment One or Two.

Services revenue—management type contracts. Management type contract revenue increased $80.6 million, or 44.2%, to $262.8 million for the six months ended June 30, 2019, compared to $182.2 million for the six months ended June 30, 2018. The increase in management type contract revenue resulted primarily from an increase of $96.8 million from new/acquired business, primarily due to the Bags acquisition, partially offset by a decrease of $13.2 million from expired business and $3.0 million from existing business. Existing business decreased $3.0 million, or 1.8%, primarily due to change in contract terms for certain management type contracts, whereby the contract terms converted from a "reverse" management type contract to a management type contract, which typically has lower management fees from the facility owner but do not require us to pay certain operating costs associated with the facilities operation, partially offset by increased management fees.

Reimbursed management type contract revenue. Reimbursed management type contract revenue increased $17.9 million, or 5.3%, to $357.8 million for the six months ended June 30, 2019, compared to $339.9 million for the six months ended June 30, 2018. This increase resulted from an increase in reimbursements for costs incurred on behalf of owners.

Table of Contents

Segment cost of services information is summarized as follows:



	Six Months Ended June 30,
	Segment One				Segment Two				Other						Total				Variance
(millions) (unaudited)	2019		2018		2019		2018		2019			2018			2019		2018		Amount			%
Cost of services lease type contracts:
New/acquired business	$	4.6	$	0.6	$	1.0	$	—	$	—		$	—		$	5.6	$	0.6	$	5.0		833.3	%
Expired business	2.3		17.1		—		—		—			—			2.3		17.1		(14.8		)	(86.5	)%
Existing business	161.6		159.3		10.3		9.9		(2.8		)	(2.2		)	169.1		167.0		2.1			1.3	%
Conversions	4.5		4.3		—		—		—			—			4.5		4.3		0.2			4.7	%
Total cost of services lease type contracts	$	173.0	$	181.3	$	11.3	$	9.9	$	(2.8	)	$	(2.2	)	$	181.5	$	189.0	$	(7.5	)	(4.0	)%
Cost of services management type contracts:
New/acquired business	$	5.5	$	0.6	$	67.5	$	0.3	$	—		$	—		$	73.0	$	0.9	$	72.1		8,011.1	%
Expired business	1.7		10.0		—		0.4		—			—			1.7		10.4		(8.7		)	(83.7	)%
Existing business	74.1		73.3		27.1		30.8		(6.8		)	(6.0		)	94.4		98.1		(3.7		)	(3.8	)%
Conversions	0.1		0.1		—		—		—			—			0.1		0.1		—			—	%
Total cost of services management type contracts	$	81.4	$	84.0	$	94.6	$	31.5	$	(6.8	)	$	(6.0	)	$	169.2	$	109.5	$	59.7		54.5	%

Cost of services associated with existing business represents business that has been operating for at least one year and operating for the entire period in the comparative period being presented. Cost of services associated with expired business relates to contacts that have expired, however, we were operating the location in the comparative period presented.

Cost of services—lease type contracts. Cost of services for lease type contracts decreased $7.5 million, or 4.0%, to $181.5 million for the six months ended June 30, 2019, compared to $189.0 million for the six months ended June 30, 2018. The decrease in cost of services for lease type contracts resulted primarily from a decrease of $14.8 million from expired business, partially offset by increases of $5.0 million from new/acquired business, $0.2 million from business that converted from management type contracts during the periods presented, and $2.1 million from existing business. Existing business costs increased $2.1 million, or 1.3%, primarily due to an increase in compensation and benefit costs, partially offset by a decrease in overall net operating costs.

From a reporting segment perspective, cost of services for lease type contracts decreased primarily from expired business in Segment One and existing business in Other, partially offset by new/acquired business in Segment One and Two, existing business in Segment One and Two and conversions in Segment One.

Cost of services—management type contracts. Cost of services for management type contracts increased $59.7 million, or 54.5%, to $169.2 million for the six months ended June 30, 2019, compared to $109.5 million for the six months ended June 30, 2018. The increase in cost of services for management type contracts resulted primarily from increases of $72.1 million from new/acquired business, primarily due to the Bags acquisition, partially offset by a decrease of $8.7 million from expired business and $3.7 million from existing business. Existing business decreased $3.7 million, or 3.8%, primarily due to a decrease in overall net operating costs, change in contract terms for certain management type contracts, whereby the contract terms converted from a "reverse" management type contract to a management type contract, which typically has lower management fees from the facility owner but do not require us to pay certain operating costs associated with the facilities operation and by an increase in compensation costs.

From a reporting segment perspective, cost of services for management type contracts increased primarily due to new/acquired business in Segment One and Two, and existing business in Segment One, partially offset by a decrease in expired business in Segment One and Two, and existing business in Segment Two and Other. The Other segment amounts in existing business represent costs not specifically identifiable to Segment One or Two.

Reimbursed management type contract expense. Reimbursed management type contract expense increased $17.9 million, or 5.3%, to $357.8 million for the six months ended June 30, 2019, compared to $339.9 million for the six months ended June 30, 2018. This increase resulted from an increase in reimbursements for costs incurred on behalf of owners.

Table of Contents

Segment gross profit/gross profit percentage information is summarized as follows:



	Six Months Ended June 30,
	Segment One						Segment Two						Other						Total						Variance
(millions) (unaudited)	2019			2018			2019			2018			2019			2018			2019			2018			Amount			%
Gross profit lease type contracts:
New/acquired business	$	0.1		$	—		$	0.3		$	—		$	—		$	—		$	0.4		$	—		$	0.4		—	%
Expired business	(0.2		)	(0.1		)	—			—			—			—			(0.2		)	(0.1		)	(0.1		)	100.0	%
Existing business	14.1			11.5			3.7			3.5			3.1			2.4			20.9			17.4			3.5			20.1	%
Conversions	0.4			0.6			—			—			—			—			0.4			0.6			(0.2		)	(33.3	)%
Total gross profit lease type contracts	$	14.4		$	12.0		$	4.0		$	3.5		$	3.1		$	2.4		$	21.5		$	17.9		$	3.6		20.1	%
	(Percentages)
Gross profit percentage lease type contracts:
New/acquired business	2.1		%	—		%	23.1		%	—		%	—		%	—		%	6.7		%	—		%
Expired business	(9.5		)%	(0.6		)%	—		%	—		%	—		%	—		%	(9.5		)%	(0.6		)%
Existing business	8.0		%	6.7		%	26.4		%	26.1		%	1,033.3		%	1,200.0		%	11.0		%	9.4		%
Conversions	8.2		%	12.2		%	—		%	—		%	—		%	—		%	8.2		%	12.2		%
Total gross profit percentage	7.7		%	6.2		%	26.1		%	26.1		%	1,033.3		%	—		%	10.6		%	8.7		%
Gross profit management type contracts:
New/acquired business	$	4.6		$	0.6		$	20.7		$	—		$	—		$	—		$	25.3		$	0.6		$	24.7		4,116.7	%
Expired business	0.6			4.8			—			0.3			—			—			0.6			5.1			(4.5		)	(88.2	)%
Existing business	41.9			42.1			14.6			13.3			11.0			11.4			67.5			66.8			0.7			1.0	%
Conversions	0.2			0.2			—			—			—			—			0.2			0.2			—			—	%
Total gross profit management type contracts	$	47.3		$	47.7		$	35.3		$	13.6		$	11.0		$	11.4		$	93.6		$	72.7		$	20.9		28.7	%
	(Percentages)
Gross profit percentage management type contracts:
New/acquired business	45.5		%	50.0		%	23.5		%	—		%	—		%	—		%	25.7		%	40.0		%
Expired business	26.1		%	32.4		%	—		%	42.9		%	—		%	—		%	26.1		%	32.9		%
Existing business	36.1		%	36.5		%	35.0		%	30.2		%	261.9		%	211.1		%	41.7		%	40.5		%
Conversions	66.7		%	66.7		%	—		%	—		%	—		%	—		%	66.7		%	66.7		%
Total gross profit percentage	36.8		%	36.2		%	27.2		%	30.2		%	261.9		%	211.1		%	35.6		%	39.9		%

Gross profit associated with existing business represents business that has been operating for at least one year and operating for the entire period in the comparative period being presented. Gross profit associated with expired business relates to contracts that have expired, however, we were operating the location in the comparative period presented.

Gross profit—lease type contracts. Gross profit for lease type contracts increased $3.6 million, or 20.1%, to $21.5 million for the six months ended June 30, 2019, compared to $17.9 million for six months ended June 30, 2018. Gross profit percentage for lease type contracts increased to 10.6% for the six months ended June 30, 2019, compared to 8.7% for the six months ended June 30, 2018. Gross profit for lease type contracts increased as a result of increases in gross profit for existing business and new/acquired business, partially offset by decreases in expired business and business that converted from management type contracts during the periods presented. Gross profit for existing business increased primarily due to increases in fees for transient revenue, partially offset by an increase in compensation and benefit costs.

From a reporting segment perspective, gross profit for lease type contracts increased primarily due to increases in new/acquired business in Segment One and Two and existing business in Segment One, Two, and Other, partially offset by decreases in gross profit from expired business in Segment One and conversions in Segment One.

Gross profit—management type contracts. Gross profit for management type contracts increased $20.9 million, or 28.7%, to $93.6 million for the six months ended June 30, 2019, compared to $72.7 million for the six months ended June 30, 2018. Gross profit percentage for management type contracts decreased to 35.6% for six months ended June 30, 2019, compared to 39.9% for six months ended June 30, 2018. Gross profit for management type contracts increased as a result of increases in gross profit for new/acquired business, primarily due to the Bags acquisition, and existing business, partially offset by a decrease in expired business. Existing business gross profit increased $0.7 million, or 1.0%, primarily due to decreases in net operating costs, partially offset by increased management fees.

Table of Contents

General and administrative expenses. General and administrative expenses increased $10.2 million, or 22.9%, to $54.8 million for the six months ended June 30, 2019, compared to $44.6 million for the six months ended June 30, 2018. The increase in General and administrative expenses was primarily related to the Bags acquisition, a $1.7 million cost recovery from a vendor partner recognized in the second quarter of 2018, and higher compensation and benefit costs, including costs associated with our performance-based compensation program.

Depreciation and amortization. Depreciation and amortization increased $6.0 million, or 70.6%, to $14.5 million for the six months ended June 30, 2019, compared to $8.5 million for the six months ended June 30, 2018. This increase was primarily a result of additional amortization relating to intangible assets recognized in the acquisition of Bags.

Interest expense. Interest expense increased $5.6 million, or 130.2%, to $9.9 million for the six months ended June 30, 2019, compared to $4.3 million for the six months ended June 30, 2018. This increase resulted primarily from an increase in borrowings used to fund the acquisition of Bags on November 30, 2018.

Interest income. Interest income was $0.2 million for the six months ended June 30, 2019 and 2018.

Equity in earnings from investment in unconsolidated entity. There were no Equity in earnings from investment in unconsolidated entity for the six months ended June 30, 2019. Equity in earnings from investment in unconsolidated entity was $10.0 million for the six months ended June 30, 2018. The decrease in earnings were primarily related to our $10.1 million net gain on the sale of our entire 30% equity interest in Parkmobile during the six months ended June 30, 2018.

Income tax expense. Income tax expense decreased $2.4 million to $8.9 million for the six months ended June 30, 2019, as compared to $11.3 million for the six months ended June 30, 2018. Our effective tax rate was 24.7% for the six months ended June 30, 2019 and 26.1% for the six months ended June 30, 2018. The effective tax rate for the six months ended June 30, 2019 decreased primarily due to do to an increase in estimated income tax credits and a reduction in state taxes.

Table of Contents

Liquidity and Capital Resources

General

We continually project anticipated cash requirements for our operating, investing, and financing needs as well as cash flows generated from operating activities available to meet these needs. Our operating needs can include, among other items, commitments for cost of services, operating leases, payroll payments, insurance claims payments, interest payments and legal settlements. Our investing and financing spending can include payments for acquired businesses, joint ventures, capital expenditures, cost of contracts purchased, commitments for capital leases, distributions to noncontrolling interests and payments on our outstanding indebtedness.

Outstanding Indebtedness

On June 30, 2019, we had total indebtedness of approximately $372.3 million, a decrease of $14.4 million from December 31, 2018. The $372.3 million in total indebtedness as of June 30, 2019 includes:


▪	$354.2 million under our Restated Credit Facility, net of original discount on borrowings of $1.4 million and deferred financing costs of $1.9 million; and


▪	$18.1 million of other debt including finance lease obligations, obligations on seller notes and other indebtedness.

Former Amended and Restated Credit Facility

On February 20, 2015, we amended and restated our credit facility (the "Former Restated Credit Facility") that permitted aggregate borrowings of $400.0 million consisting of (i) a revolving credit facility of up to $200.0 million at any time outstanding, which includes a $100.0 million sublimit for letters of credit and a $20.0 million sublimit for swing-line loans, and (ii) a term loan facility of $200.0 million. The Former Restated Credit Facility was due to mature on February 20, 2020.

Senior Credit Facility

On November 30, 2018 (the "Closing Date") and in connection with the Acquisition, we entered into a credit agreement (the “Credit Agreement”) with Bank of America, N.A. (“Bank of America”), as Administrative Agent, swing-line lender and a letter of credit issuer; Wells Fargo Bank, N.A., as syndication agent; BMO Harris Bank N.A., JPMorgan Chase Bank, N.A., KeyBank National Association and U.S. Bank National Association, as co-documentation agents; Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners; and the lenders party thereto (the “Lenders”). Pursuant to the terms, and subject to the conditions, of the Credit Agreement, the Lenders have made available to us a new senior secured credit facility (the “Senior Credit Facility”) that permits aggregate borrowings of $550.0 million consisting of (i) a revolving credit facility of up to $325.0 million at any time outstanding, which includes a letter of credit facility that is limited to $100.0 million at any time outstanding, and (ii) a term loan facility of $225.0 million. The Senior Credit Facility matures on November 30, 2023.

The entire amount of the term loan portion of the Senior Credit Facility was drawn by us on the Closing Date and is subject to scheduled quarterly amortization of principal in installments equal to 1.25% of the initial aggregate principal amount of such term loan. We also borrowed $174.8 million under the revolving credit facility on the Closing Date. The proceeds from these borrowings were used by us to pay the purchase price for the Acquisition (See Note 3. Acquisition), to pay other costs and expenses related to the acquisition of Bags and the related financing and to repay in full the obligations under the Former Restated Credit Facility. In addition, proceeds from the Senior Credit Facility may be used to finance working capital, capital expenditures and other acquisitions, payments and general corporate purposes.

Borrowings under the Senior Credit Facility bear interest, at our option, (i) at a rate per annum based on our consolidated total debt to EBITDA ratio for the 12-month period ending as of the last day of the immediately preceding fiscal quarter, determined in accordance with the applicable pricing levels set forth in the Credit Agreement (the “Applicable Margin”) for London Interbank Offered Rate (or a comparable or successor rate approved by Bank of America) (“LIBOR”) loans, plus the applicable LIBOR rate or (ii) the Applicable Margin for base rate loans plus the highest of (x) the federal funds rate plus 0.5%, (y) the Bank of America prime rate and (z) a daily rate equal to the applicable LIBOR rate plus 1.0%.

Under the terms of the Credit Agreement, we are required to maintain a maximum consolidated total debt to EBITDA ratio of not greater than 4.25:1.0 with certain step-downs described in the Credit Agreement. In addition, we are required to maintain a minimum consolidated fixed charge coverage ratio of not less than 3.50:1.0 (with certain step-ups described in the Credit Agreement).

Table of Contents

Each wholly owned domestic subsidiary of ours (subject to certain exceptions set forth in the Credit Agreement) has guaranteed all existing and future indebtedness and liabilities of the other guarantors and us arising under the Credit Agreement. Our obligations under the Credit Agreement and such domestic subsidiaries’ guaranty obligations are secured by substantially all of their respective assets.

We are in compliance with the covenants under the Credit Agreement as of June 30, 2019.

As of June 30, 2019, we had $128.8 million of borrowing availability under the Senior Credit Facility, of which we could have borrowed $128.8 million on June 30, 2019 and remained in compliance with the above described covenants as of such date. Our borrowing availability under the Credit Agreement is limited only as of our fiscal quarter-end by the covenant restrictions described above. At June 30, 2019, we had $58.1 million letters of credit outstanding under the Senior Credit Facility and borrowings against the Senior Credit Facility aggregated $357.5 million (excluding debt discount of $1.4 million and deferred financing costs of $1.9 million).

Contractual Obligations and Commitments

As of June 30, 2019, other than changes related to adoption of the new lease accounting standard as described in Note 1. Significant Accounting Policies and Practices, there were no material changes to our contractual obligations and commitments outside the ordinary course of business since December 31, 2018, as reported in our 2018 Form 10-K. See Note 2. Leases, for further information regarding our contractual obligations and commitments.

Share Repurchases

In May 2016, our Board of Directors authorized us to repurchase shares of our common stock in the open market of up to $30.0 million in aggregate. Purchases of our common stock may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with Rules 10b-18 and 10b5-1 under the Securities Exchange Act of 1934. The share repurchase program does not obligate us to repurchase any particular amount of common stock, and has no fixed termination date.

Under this program, we repurchased 726,899 shares of common stock through June 30, 2019 at an average price of $29.01 per share, resulting in $21.1 million in program-to-date repurchases. 348,974 and 421,716 shares were repurchased during the three and six months ended June 30, 2019 at an average price of $32.33 per share for both periods. No shares were repurchased during the three and six months ended June 30, 2018.

Interest Rate Collars

In May 2019, we entered into three-year interest rate collar contracts with a $222.3 million notional amount. Interest rate collars are used to manage interest rate risk associated with variable interest rate borrowings under the Credit Agreement. The collars establish a range where the Company will pay the counterparties if the one-month LIBOR rate falls below the established floor rate, and the counterparties will pay the Company if the one-month LIBOR rate exceeds the established ceiling rate of 2.5%. The collars settle monthly through the termination date of April 2022. No payments or receipts are exchanged on the interest rate collar contracts unless interest rates rise above or fall below the pre-determined ceiling or floor rates. The notional amount amortizes consistent with pay down of the term loan portion of the Senior Credit Facility. These interest rate collars are classified as cash flow hedges, and the Company calculates the effectiveness of the hedge on a monthly basis. As of December 31, 2018, the Company had no ongoing derivative transactions.

We do not enter into derivative instruments for any purpose other than for cash flow hedging purposes.

Deficiency Payments

Pursuant to our obligations with respect to the parking garage operations at Bradley International Airport, we are required to make certain deficiency payments for the benefit of the State of Connecticut and for holders of special facility revenue bonds. The deficiency payments represent contingent interest bearing advances to the trustee to cover operating cash flow requirements. As of June 30, 2019, we had made $1.4 million of cumulative deficiency repayments from the trustee, net of payments. Deficiency payments made are recorded as increases to cost of services and the reimbursements are recorded as reductions to cost of services. We believe these advances to be fully recoverable and will recognize the principal, interest and premium payments related to these deficiency payments when they are received. We do not directly guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut or the trustee.

Table of Contents

The total deficiency repayments (net of payments made), interest and premium received and recorded for the three and six months ended June 30, 2019 and 2018 are as follows:



	Three Months Ended				Six Months Ended
(millions) (unaudited)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Deficiency repayments	$	1.8	$	1.4	$	2.4	$	2.0
Interest	$	0.5	$	0.5	$	0.5	$	0.5
Premium	$	0.2	$	0.1	$	0.2	$	0.2

Daily Cash Collections

As a result of day-to-day activity at our parking locations, we collect significant amounts of cash. Lease type contract revenue is generally deposited into our local bank accounts, with a portion remitted to our clients in the form of rental payments according to the terms of the leases. Under management type contracts, clients may require us to deposit the daily receipts into one of our local bank accounts, with the cash in excess of our operating expenses and management fees remitted to the clients at negotiated intervals. Other clients require us to deposit the daily receipts into client designated bank accounts and the clients then reimburse us for operating expenses and pay our management fee subsequent to month-end or may require segregated bank accounts for the receipts and disbursements at locations. Our working capital and liquidity may be adversely affected if a significant number of our clients require us to deposit all parking revenues into their respective accounts.

Our liquidity also fluctuates on an intra-month and intra-year basis depending on the contract mix and timing of significant cash payments. Additionally, our ability to utilize cash deposited into our local accounts is dependent upon the availability and movement of that cash into our corporate account. For all these reasons, from time to time, we carry a significant cash balance, while also utilizing our credit facility.

Summary of Cash Flows



	Six Months Ended
(millions) (unaudited)	June 30, 2019			June 30, 2018
Net cash provided by operating activities	$	21.3		$	25.3
Net cash (used in) provided by investing activities	$	(5.4	)	$	14.7
Net cash used in financing activities	$	(33.5	)	$	(29.7	)

Operating Activities

Our primary sources of funds are cash flows from operating activities and changes in operating assets and liabilities.

Net cash provided by operating activities totaled $21.3 million for the six months ended June 30, 2019. Cash provided by operating activities for the first six months of 2019 included $45.3 million from operations, partially offset by changes in operating assets and liabilities that resulted in a use of $24.0 million. The net increase in operating assets and liabilities was a result of (i) an increase in notes and accounts receivable of $11.8 million primarily related to timing of collections; (ii) a $2.7 million decrease in accounts payable primarily due to timing of payments to our clients as described under "Daily Cash Collections"; (iii) a net decrease in prepaid and other assets of $0.6 million primarily due to decreases in prepaid insurance and prepaid rent; (iv) a $67.2 million decrease in right-of-use assets due to the amortization of Right-of-use assets; (v) a $70.1 million decrease in long-term lease liabilities due to operating lease payments; and (vi) a $7.2 decrease in accrued liabilities primarily due to timing of payments.

Net cash provided by operating activities totaled $25.3 million for the six months ended June 30, 2018. Cash provided by operating activities for the first six months of 2018 included $33.9 million from operations, partially offset by changes in operating assets and liabilities that resulted in a cash use of $8.6 million. The net decrease in operating assets and liabilities was a result of (i) an increase in notes and accounts receivable of $8.7 million due to recognizing a contract asset upon adoption of Topic 606 (effective January 1, 2018) and timing of collections; (ii) a net decrease in prepaid and other assets of $3.3 million mainly due to decreases in prepaid taxes and short-term deposits, partially offset by increases in prepaid insurance and prepaid rent; (iii) a $7.9 million decrease in accounts payable due to timing of payments to our clients as described under "Daily Cash Collections", partially offset by recognizing a contract liability upon the adoption of Topic 606 (effective January 1, 2018) and (iv) a $4.7 million increase in accrued liabilities primarily related to timing of payments.

Table of Contents

Investing Activities

Net cash used in investing activities totaled $5.4 million for the six months ended June 30, 2019. Cash used in investing activities for the six months ended June 30, 2019 included (i) $4.2 million for capital investments needed to secure and/or extend lease facilities and investments in information system enhancements and infrastructure and (ii) $1.4 million for cost of contract purchases, partially offset by (iii) $0.2 million of proceeds from the sale of assets and contract terminations.

Net cash provided by investing activities totaled $14.7 million for the six months ended June 30, 2018. Cash provided by investing activities for the six months ended June 30, 2018 included $19.3 million of proceeds received from the sale of equity method investments, partially offset by (i) $4.0 million for capital investments needed to secure and/or extend lease facilities and investments in information system enhancements and infrastructure and (ii) $0.7 million for cost of contract purchases.

Financing Activities

Net cash used in financing activities totaled $33.5 million in the six months ended June 30, 2019. Cash used in financing activities for the six months ended June 30, 2019 included (i) $17.5 million net payments on the credit facility; (ii) $13.6 million on payments for the repurchase of common stock; (iii) $1.0 million for payments on other long-term debt obligations; and (iv) $1.4 million of distributions to noncontrolling interest.

Net cash used in financing activities totaled $29.7 million in the six months ended June 30, 2018. Cash used in financing activities for the six months ended June 30, 2018 included (i) $27.8 million net payments on the credit facility; (ii) $1.6 million of distributions to noncontrolling interest; (iii) $0.2 million for payments on other long-term debt obligations; and (iv) $0.1 million on payments for debt issuance costs.

Cash and Cash Equivalents

We had Cash and cash equivalents of $22.3 million and $39.9 million at June 30, 2019 and December 31, 2018, respectively. Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements were $0.2 million and $1.7 million as of June 30, 2019 and December 31, 2018, respectively, and are included within Cash and cash equivalents within the Condensed Consolidated Balance Sheets.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Form 10-K for the year-ended December 31, 2018.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we conducted an evaluation, under supervision and with the participation of management, including the chief executive officer and senior vice president and corporate controller, of the effectiveness of the design and operation of our disclosure controls and procedures (the "Evaluation") at a reasonable assurance level as of the last day of the period covered by this Form 10-Q.

Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosures.

Based on the Evaluation, our chief executive officer and senior vice president, corporate controller concluded that our disclosure controls and procedures were effective as of June 30, 2019.

Management's assessment of internal control over financial reporting as of December 31, 2018 excludes internal control over financial reporting related to ZWB Holdings, Inc. and Rynn's Luggage Corporation, their subsidiaries and affiliates (collectively, "Bags") (acquired on November 30, 2018).

Table of Contents

Changes in Internal Controls Over Financial Reporting

There have been no significant changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2019, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting. We implemented internal controls to ensure we adequately evaluated our contracts and properly assessed the impact of the new lease accounting standard, Topic 842, that the Company adopted on January 1, 2019. There were no significant changes to our internal control over financial reporting due to the adoption of the standard. Management's assessment and conclusions on the effectiveness of internal control over financial reporting did not include the internal controls of Bags, which is included in the three and six months ended June 30, 2019 Quarterly Financial Statements of SP Plus Corporation. We will incorporate Bags into our annual evaluation of internal control over financial reporting for the year ending December 31, 2019.

Inherent limitations of the Effectiveness of Internal Control

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to claims and litigation in the normal course of our business. The outcomes of claims and legal proceedings brought against us and other loss contingencies are subject to significant uncertainty. We accrue a charge when our management determines that it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. When a loss is probable, we record an accrual based on the reasonably estimable loss or range of loss. When no point of loss is more likely than another, we record the lowest amount in the estimated range of loss and disclose the estimated range. We do not record liabilities for reasonably possible loss contingencies, but do disclose a range of reasonably possible losses if they are material and we are able to estimate such a range. If we cannot provide a range of reasonably possible losses, we explain the factors that prevent us from determining such a range. In addition, we accrue for the authoritative judgments or assertions made against us by government agencies at the time of their rendering regardless of our intent to appeal. We regularly evaluate current information available to us to determine whether an accrual should be established or adjusted. Estimating the probability that a loss will occur and estimating the amount of a loss or a range of loss involves significant estimation and judgment.

Item 1A. Risk Factors

There have been no material changes to the risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. See Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Important Information Regarding Forward Looking Statements for risks related to the proposed Bags acquisition.

Item 2. Unregistered Sales of Equity and Use of Proceeds

The following table provides information about purchases we made during the quarter ended June 30, 2019 of equity securities that are registered by us pursuant Section 12 of the Exchange Act:



(millions, except for share and per share data) (unaudited)	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plan
04/01/2019 through 04/30/2019	17,260	$	32.91	17,260	$	19.6
05/01/2019 through 05/31/2019	146,184	32.30		146,184	14.9
06/01/2019 through 06/30/2019	185,530	32.30		185,530	8.9
Total	348,974	$	32.29	348,974	$	8.9

In May 2016, our Board of Directors authorized us to repurchase in the open market shares of our outstanding common stock in an amount not to exceed $30.0 million.

During the second quarter of 2019, we repurchased 348,974 shares in the open market at an average price of $32.29 per share and average commissions of $0.03 per share. The total value of the second quarter transactions was $11.3 million. At June 30, 2019, 726,899 shares were held as treasury stock.

As of June 30, 2019, $8.9 million remained available for repurchase under the May 2016 stock repurchase program. The share repurchase program has no fixed termination date.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Table of Contents

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Index to Exhibits



		Incorporated by Reference
Exhibit Number	Description	Form	Exhibit	Filing Date/Period End Date

10.1*+	Amended and Restated Employment Agreement by and between SP Plus Corporation and G Marc Baumann effective as of June 1, 2019.

31.1*	Section 302 Certification dated August 1, 2019 for G Marc Baumann, Director, President and Chief Executive Officer (Principal Executive Officer).

31.2*	Section 302 Certification dated August 1, 2019 for Kristopher H. Roy, Senior Vice President, Corporate Controller (Principal Financial Officer and Principal Accounting Officer).

32**	Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 1, 2019.

101.INS*	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase
101.DEF*	XBRL Taxonomy Extension Definition Linkbase
101.LAB*	XBRL Taxonomy Extension Label Linkbase
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith

** Furnished herewith

+ Management contract or compensation plan, contract or agreement

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	SP PLUS CORPORATION

Date: August 1, 2019	By:	/s/ G MARC BAUMANN
		G Marc Baumann
		Director, President and Chief Executive Officer
		(Principal Executive Officer)

Date: August 1, 2019	By:	/s/ KRISTOPHER H. ROY
		Kristopher H. Roy
		Senior Vice President, Corporate Controller
		(Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer)

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) by and between SP Plus Corporation, a Delaware corporation (the “Company”) and G Marc Baumann (the “Executive”), effective as of June 1, 2019 (the “Effective Date”)

RECITALS

A. The Company is in the business of providing an array of commercial and residential property management services, including, operating private and public parking facilities for itself, its subsidiaries, affiliates and others, and as a consultant and/or manager for parking facilities operated by others throughout the United States and Canada, providing on-street and off-street parking enforcement, residential and commercial property management services, security services for commercial establishments and airport and urban transportation services (the Company and its subsidiaries and affiliates and other Company-controlled businesses engaged in parking garage management (in each case including their predecessor's or successor's) are referred to hereinafter as the “Parking Companies”).

B. Prior to the Effective Date, Executive was employed by the Company as President and Chief Executive Officer, pursuant to that certain Amended and Restated Employment Agreement dated November 19, 2014 (the “Prior Agreement”).

C. In order to protect the Company’s confidential information, goodwill and customer relationships and to induce the Executive to serve as Chief Executive Officer of the Company, the Company desires to provide the Executive with consideration and benefits on the terms set forth in this Agreement in exchange for the obligations herein.

D. The Company and the Executive desire to continue Executive’s employment relationship with the Company, and Executive is willing to accept such employment and perform services for the Company on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of: (i) the foregoing premises, and (ii) the mutual covenants and agreements herein contained, the Company and Executive hereby covenant and agree as follows:

1. Employment Period.

The Company shall continue to employ the Executive, and the Executive shall continue to serve the Company, on the terms and conditions set forth in this Agreement, beginning on the Effective Date and continuing from month to month thereafter until the Agreement is terminated in accordance with the terms and conditions stated herein (the “Employment Period”). Notwithstanding any such termination, Section 6 of this Agreement shall remain in full force and effect.

2. Position and Duties. During the Employment Period, the Executive shall serve as Chief Executive Officer of the Company, with the duties, authority and responsibilities as

are commensurate with such position as are customarily associated with such position. Executive shall hold such other positions in the Company or any of the other Parking Companies as may be assigned to him from time to time by the Board of Directors (the “Board”) of the Company. The Executive shall report directly to the Board. The Executive shall not, during the term of this Agreement, engage in any other business activities that will interfere with the Executive's employment pursuant to this Agreement, it being agreed that the Executive may engage in, and may retain any fees payable as a result of, speaking or writing activities or service as a director of a non-competing company so long as such engagements do not interfere with Executive’s employment and duties pursuant to this Agreement. The Executive’s acceptance of any such directorship shall be subject to prior approval of the Company’s Board provided such approval shall not be unreasonably withheld. Executive shall discharge his duties and responsibilities under this Agreement in accordance with the Company’s Code of Conduct presently in effect or as amended and modified from time to time hereafter. During the Employment Period, the Executive’s services shall be performed primarily in Chicago, Illinois.

3. Compensation.

(a) Base Salary. Commencing as of the Effective Date, the Executive shall receive base salary at the annual rate of Eight Hundred Thousand Dollars ($800,000.00) (the “Annual Base Salary”). The Annual Base Salary shall be payable in accordance with the Company’s normal payroll practice for executives as in effect from time to time, At no time during the Employment Period shall the Annual Base Salary be reduced below the base salary in effect as of the Effective Date (the “Base Minimum Salary”) except if the Executive’s duties and responsibilities have been reduced at the Executive’s request.

(b) Bonus. For the 2019 calendar year, and each subsequent calendar year ending during the Employment Period, the Executive shall be eligible to receive an annual bonus (the “Annual Bonus”) based upon terms and conditions of an annual bonus program established for the Executive by the Company (the “Annual Bonus Program”). The Annual Bonus will be paid in the calendar year immediately following the year for which it is earned, no later than March 15 of such year. In all events, the Executive's target Annual Bonus (the “Target Annual Bonus”) throughout the Employment Period will be not less than Eight Hundred Thousand Dollars ($800,000.00) per calendar year, with the actual amount of the Annual Bonus being determined in relation to the Target Annual Bonus in accordance with the terms of the Annual Bonus Program as approved annually by the Compensation Committee of the Board of Directors.

(c) Equity Plan. Executive shall be entitled to participate in the Company’s Long Term Incentive Plan on the terms and conditions set forth in the Long Term Incentive Plan document and any corresponding agreements governing the issuance of equity.

(d) Other Benefits. In addition to the foregoing, during the Employment Period: (i) the Executive shall be entitled to participate in savings, retirement, and fringe benefit plans,

practices, policies and programs of the Company as in effect from time to time, including, but not limited to the Company's 401(k) plan and the Non-Qualified Deferred Compensation (NQDC) program on the same terms and conditions as those applicable to peer executives; (ii) the Executive shall be entitled to four (4) weeks of annual paid vacation, to be taken in accordance with the Company's vacation policy as in effect from time to time; and (iii) the Executive and the Executive's family shall be eligible for participation in, and shall receive all benefits under group medical, disability and other welfare benefit plans, practices, policies and programs provided by the Company, as in effect from time to time, on the same terms and conditions as those applicable to peer executives.

(e) Business Expenses. Executive shall be reimbursed by the Company for business expenses incurred on behalf of the Parking Companies in accordance with the policies and practices of the Company as in effect from time to time.

(f) Insurance. In addition to the insurance benefits described in subparagraph 3(d) above, during the Employment Period the Company agrees to pay the annual premium on an insurance policy or policies on the life of the Executive, which policy or policies will provide an annual cash benefit to the Executive of at least $150,000 for a period of fifteen years beginning in the year in which the Executive attains age sixty-five (65) (any one or more of such policies to be referred to herein as the “Policy”). The Policy shall be owned by and entered into in the name of the Executive, and the Company shall have no right to any proceeds from or any other ownership interest in the Policy. The Company further agrees that in the event of a termination of the Executive’s employment for any reason other than Cause or the Executive’s voluntary termination of employment without Good Reason, it shall continue to pay the annual premium on the Policy until the earlier of (i) the Executive’s death or (ii) the date the Executive attains age sixty-five (65). In addition to the Policy, the Company shall provide the Executive with life insurance above the standard benefit package in an amount equal to $1,000,000 until the Executive attains age 72.

4. Termination of Employment.

(a) Death or Disability. In the event of the Executive's death during the Employment Period, the Executive's employment with the Company shall terminate automatically. The Company, in its discretion, shall have the right to terminate the Executive's employment because of the Executive's Disability during the Employment Period. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days, or for periods aggregating 180 business days in any period of twelve months, as a result of incapacity due to mental or physical illness or injury which is determined to be total and permanent by a physician selected by the Company or its insurers. A termination of the Executive's employment by the Company for Disability shall be communicated to the Executive by written notice, and shall be effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), unless the Executive returns to full-time performance of the Executive's duties before the Disability Effective Date.

(b) By the Company. In addition to termination for Disability, the Company may terminate the Executive's employment during the Employment Period for Cause or without Cause. "Cause" means:

(i) the continued and willful or deliberate failure of the Executive to substantially perform the Executive’s duties, or to comply with the Executive’s obligations, under this Agreement (other than as a result of physical or mental illness or injury); or

(ii) illegal acts or gross misconduct by the Executive, in either case that is willful and results in material damage to the business or reputation of the Company.

Upon the occurrence of events constituting Cause as defined in subsection (i) of this paragraph 4(b), the Company shall give the Executive advance notice of any such termination for Cause and shall provide the Executive with a reasonable opportunity to cure.

(c) Voluntarily by the Executive. The Executive may terminate his employment by giving written notice thereof to the Company, provided, however, that if Executive terminates his employment for Good Reason, such termination shall not be considered a voluntary termination by Executive and Executive shall be treated as if he had been terminated by the Company pursuant to paragraph 5(a) below. "Good Reason" means any of the following:

(i) a reduction in the Executive’s Annual Base Salary, which is not accompanied by a similar reduction in annual base salaries of similarly situated executives of the Company (provided, however, that in no event shall the Executive’s Annual Base Salary be reduced to less than the Base Minimum Salary unless permitted by paragraph 3(a) above); or

(ii) a reduction in the Executive’s Target Annual Bonus;

(iii) a breach by the Company of this Agreement (including without limitation the provisions of paragraph 2 and paragraphs 3(a) and (b) above) after Executive has given to the Company advance written notice of, and a reasonable opportunity to cure, any such breach; or

(iv) the Company’s requirement that the Executive relocate his principal place of business outside of the greater Chicago metropolitan area.

(d) Date of Termination. The "Date of Termination" means the date of the Executive's death, the Disability Effective Date, the date on which the termination of the Executive's employment by the Company for Cause, as set forth in notice from the Company, is effective, the date that notice of termination is provided to the Executive from Company of a termination of the Executive's employment by the Company other than for Cause or Disability, or the date on which the Executive gives the Company notice of termination of employment, as the case may be.

5. Obligations of the Company upon Termination.

The Executive shall receive accrued but unpaid vacation pay through the Date of Termination. The Company agrees to compensate the Executive under certain terminating events as is described in paragraph 5(a), (b), (c) and (d) as consideration for the representations, restrictions and obligations contained in paragraph 6. Nothing in this Agreement shall affect or diminish any party’s rights and/ or obligations under the Company’s Long Term Incentive Plan (“LTIP”) and/or Performance Share Award Agreements (“PSU”) or Restricted Stock Unit Award agreements pertaining to the LTIP program (hereinafter collectively referred to as “Equity Awards”).

(a) By the Company without cause or by the Executive with Good Reason

(1) If on or before December 31, 2023, the Company terminates the Executive's employment, other than for Cause, or if the Executive terminates his employment with Good Reason, the Company shall, subject to and conditioned upon the Executives agreement to strictly comply with all the terms set forth in paragraph 6 of this Agreement:

(i) continue to pay the Executive's Annual Base Salary and Target Annual Bonus as in effect immediately before the Date of Termination over a period of 24 months [e.g., $800,000 (base salary) plus $800,000 (target annual bonus) = $1,600,000/ 12= $133,333.33 per month and multiplied by 24 = $3,200,000 ( total payment over 24 months)],

(ii) pay any earned and unpaid Annual Bonus for the calendar year ending prior to the Date of Termination; and,

(iii) continue to provide for a period eighteen (18) months from the Date of Termination welfare benefits to the Executive and/or the Executive’s family at least as favorable as those that would have been provided to them under clause (d) (iii) of Section 3 of this Agreement until the end of eighteen (18) months from the Date of Termination; provided, that during any periods when the Executive is eligible to receive such benefits under another employer-provided plan, the benefits provided by the Company under this Section 5(a) may be made secondary to those provided under such other plan, and

(iv) pay when vested amounts due under outstanding Equity Awards.

(2) If, after December 31, 2023, the Company terminates the Executive’s employment other than for Cause or if Executive terminates his employment with Good Reason, the Company shall pay the Executive (i) the Annual Base Salary through the Date of Termination, (ii) the Annual Bonus for any calendar year ended prior to the Date of Termination, and (iii) any other vested benefits to which the Executive is entitled, in each case to the extent not yet paid, including but not limited to accrued but unpaid vacation pay and the Company shall have no further obligations to the Executive under this Agreement except to the extent the Executive has outstanding Equity Awards that will vest on the Date of Termination or at a later date.

(b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, the Company shall make, within thirty (30) days after the Date of Termination, a lump-sum cash payment to the Executive's estate equal to the sum of (i) the Executive's Annual Base Salary through the end of the calendar month in which death occurs, (ii) any earned and unpaid Annual Bonus for any calendar year ended prior to the Date of Termination and a prorated Target Bonus for services rendered in the year of death up to the Date of Termination, (iii) any accrued but unpaid vacation pay through the end of the calendar month in which death occurs, and (iv) any other vested benefits to which the Executive is entitled, including but not limited to outstanding Equity Awards that will vest on the Date of Termination or at a later date, in each case to the extent not yet paid, except for any death benefit, in which case the death benefit shall be paid to Executive’s estate within seven (7) days following receipt of any such death benefit by the Company from the insurer.

(c) Disability. In the event the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period in accordance with paragraph 4(a) hereof, the Company shall pay to the Executive or the Executive's legal representative, as applicable, for eighteen months (i) the Executive's Annual Base Salary at the rate in effect immediately preceding the Date of Termination, provided that any such payments made to the Executive shall be reduced by the sum of the amounts, if any, payable to the Executive under any disability benefit plans of the Company or under the Social Security disability insurance program, (ii) any earned and unpaid Annual Bonus for any calendar year ended prior to the Date of Termination and a pro-rata Target Bonus for services rendered in the calendar year in which the Date of Termination occurs, and (iii) any other vested benefits, including but not limited to outstanding Equity Awards that will vest on the Date of Termination or at a later date, to which the Executive is entitled, in each case to the extent not yet paid, including, but not limited to accrued but unpaid vacation pay. The Annual Base Salary and bonus payments to be made under this paragraph 5(c) shall be made as and when such amounts would be paid in accordance with paragraphs 3(a) and (b) above.

(d) Cause; Voluntary Termination: If the Executive's employment is terminated by the Company for Cause or the Executive voluntarily terminates his employment during the Employment Period (other than for “Good Reason”), the Company shall pay the Executive (i) the Annual Base Salary through the Date of Termination, (ii) the Annual Bonus for any calendar year ended prior to the Date of Termination, and (iii) any other vested benefits to which the Executive is entitled, in each case to the extent not yet paid, including but not limited to accrued but unpaid vacation pay, and the Company shall have no further obligations to the Executive under this Agreement, except in the case of voluntary termination the Company will pay the value of outstanding Equity Awards that will vest on the Date of Termination or a later date.

6. Protection of Company Assets.

(a) Trade Secret and Confidential Information. The Executive recognizes and acknowledges that the acquisition and operation of, and the providing of consulting services for, parking facilities is a unique enterprise and that there are relatively few firms engaged in these businesses in the primary areas in which the Parking Companies operate. The Executive further recognizes and acknowledges that in exchange for his or her employment with the Parking Companies, the Executive has been given access to and provided with and will continue to be provided with additional confidential information and trade secrets of the Parking Companies that constitute proprietary information that the Parking Companies are entitled to protect, which information constitutes special and unique assets of the Parking Companies, which is not generally available to the public, including without limitation (i) information relating to the Parking Companies' manner and methods of doing business, including without limitation, strategies for negotiating leases and management agreements; (ii) the identity of the Parking Companies' clients, customers, prospective clients and customers, lessors and locations, and the identity of any individuals or entities having an equity or other economic interest in any of the Parking Companies to the extent such identity has not otherwise been voluntarily disclosed by any of the Parking Companies; (iii) the specific confidential terms of management agreements, leases or other business agreements, including without limitation the duration of, and the fees, rent or other payments due thereunder; (iv) the identities of beneficiaries under land trusts; (v) the business, developments,

activities or systems of the Parking Companies, including without limitation any marketing or customer service oriented programs in the development stages or not otherwise known to the general public; (vi) information concerning the business affairs of any individual or firm doing business with the Parking Companies; (vii) financial data and the operating expense structure pertaining to any parking facility owned, operated, leased or managed by the Parking Companies or for which the Parking Companies have or are providing consulting services; (viii) information pertaining to computer systems, including but not limited to computer software, used in the operation of the Parking Companies; and (ix) other confidential information and trade secrets relating to the operation of the Company's business (the matters described in this sentence are referred to herein as "Trade Secret and Confidential Information").

(b) Customer Relationships. The Executive understands and acknowledges that the Company has expended significant resources over many years to identify, develop, and maintain its clients. The Executive additionally acknowledges that the Company’s clients have had continuous and long-standing relationships with the Company and that, as a result of these close, long-term relationships, the Company possesses significant knowledge of and confidential information about its clients and their needs. Finally, the Executive acknowledges the Executive’s association and contact with these clients is derived solely from Executive’s employment with the Company. The Executive further acknowledges that the Company does business throughout the United States and that the Executive personally has significant contact with the Company’s clients and customers solely as a result of Executive’s relationship with the Company.

(c) Confidentiality. With respect to Trade Secret and Confidential Information, and except as may be required by the lawful order of a court or government agency of competent jurisdiction, the Executive agrees that Executive shall during his or her employment and thereafter :

(i) hold all Trade Secret and Confidential Information in strict confidence and not publish or otherwise disclose any portion thereof to any person whatsoever except with the prior written consent of the Company so long as such Information is not generally available to the public or industry;

(ii) use all reasonable precautions to assure that the Trade Secret and Confidential Information are properly protected and kept from unauthorized persons or use;

(iii) make no use of any Trade Secret and Confidential Information except as is required in the performance of Executive’s duties for the Company; and

(iv) immediately upon termination of Executive’s employment with the Company, whether voluntary or involuntary and regardless of the reason or cause, or upon the request of the Company, promptly return to the Company all Company property including, without limitation, any and all documents, and other things relating to any Trade Secret and Confidential Information, all of which are and shall remain the sole property of the Company. The term "documents" as used in the preceding sentence shall mean all forms of written or recorded information and shall include, without limitation, all accounts, budgets, compilations, computer records (including, but not limited to, computer programs, software, disks, diskettes or any other electronic or magnetic storage media), contracts, correspondence, data, diagrams, drawings, financial statements, memoranda, microfilm or microfiche, notes, notebooks, marketing or other

plans, printed materials, records and reports, as well as any and all copies, reproductions or summaries thereof.

Notwithstanding the above, nothing contained herein shall restrict the Executive from using, at any time after Executive’s termination of employment with the Company, information which is generally available to the public or industry.

(d) Assignment of Intellectual Property Rights. The Executive agrees to assign to the Company any and all intellectual property rights including patents, trademarks, copyright and business plans or systems developed, authored or conceived by the Executive while so employed and relating to the business of the Company, and the Executive agrees to cooperate with the Company's attorneys to perfect ownership rights thereof in the Company or any one or more of the Company. This agreement does not apply to an invention for which no equipment, supplies, facility or Trade Secret and Confidential Information of the Company was used and which was developed entirely on the Executive's own time, unless (i) the invention relates either to the business of the Company or to actual or demonstrably anticipated research or development of the Parking Companies, or (ii) the invention results from any work performed by the Executive for the Parking Companies.

(e) Non-Compete. Executive agrees that while employed by the Company and for a period of twenty-four (24) months after his Date of Termination for any reason, Executive will not directly or indirectly without first obtaining the express written permission of the Employer’s General Counsel, which permission may be withheld in the Employer’s sole discretion:

(i) conduct business with any client or customer of the Company with which Executive had any direct contact or responsibility within the twelve months preceding the Date of Termination or about whom Executive acquired any Trade Secret or Confidential Information during his or her employment with the Company; provided, however, that this subparagraph shall not prohibit Executive from engaging in the above-described activities to the extent Executive is employed by or rendering services to an entity that does not engage in the parking, transportation, facility management services business or any other businesses that the Company is then actively engaged in; or

(ii) become employed by or render services to any competitor of the Company whether a person, partnership, joint venture, consulting firm or other business, if in so doing the Executive duties would involve any level of strategic advisory, technical, sales, customer, client marketing, or other consulting functions competitive with the Company in the parking, transportation, facility management services business or any other businesses that the Company is then actively engaged in;

(f) Non-Solicitation. The Executive agrees that while he is employed by the Company and for a period of twenty-four (24) months after the Date of Termination, the Executive shall not, directly or indirectly:

(i) without first obtaining the express written permission of the Company’s General Counsel, which permission may be withheld solely in the Company’s discretion, directly or indirectly contact or solicit business from any client or customer of the Company with whom the Executive had direct contact or responsibility or about whom the Executive acquired any Trade Secret or Confidential Information during his employment with the Company. Likewise, the Executive shall not, without first obtaining the express written permission of the Company’s General Counsel which permission may be withheld solely in the Company’s discretion, directly or indirectly contact or solicit business from any person responsible for referring business to the Company or who regularly refers business to the Company with whom the Executive had any direct contact or about whom the Executive acquired any Trade Secret or Confidential Information during his employment with the Company or about whom the Executive has acquired any information as a result of his employment with the Company ; provided, however, that this subparagraph shall not prohibit Executive from engaging in the above-described activities to the extent Executive is employed by or rendering services to an entity that does not engage in the parking, transportation, facility management services business or any other businesses that the Company is then actively engaged in; or

(ii) take any action to hire, recruit or to directly or indirectly assist in the hiring, recruiting or solicitation for employment of any officer, employee or representative of the Parking Companies who possesses Trade Secret and Confidential Information of the Company.

If the Executive, after the termination of his employment hereunder, has any question regarding the applicability of the above provisions to a potential employment opportunity, the Executive acknowledges that it is his or her responsibility to contact the Company so that the Company may inform the Executive of its position with respect to such opportunity.

(g) Remedies. The Executive acknowledges that the Company would be irreparably injured by a violation of the covenants of this paragraph 6 and agrees that the Company, or any one or more of the Parking Companies, in addition to any other remedies available to it or them for such breach or threatened breach, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief in a court of law or through arbitration, restraining the Executive from any actual or threatened breach of any of the provisions of this paragraph 6. If a bond is required to be posted in order for the Company or any one or more of the Company to secure an injunction or other equitable remedy, the parties agree that said bond need not exceed a nominal sum. This paragraph shall be applicable regardless of the reason for the Executive's termination of

employment, and independent of any alleged action or alleged breach of any provision hereby by the Company. If at any time any of the provisions of this paragraph 6 shall be determined to be invalid or unenforceable by reason of being vague or unreasonable as to duration, area, scope of activity or otherwise, then this paragraph 6 shall be considered divisible (with the other provisions to remain in full force and effect) and the invalid or unenforceable provisions shall become and be deemed to be immediately amended to include only such time, area, scope of activity and other restrictions, as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter, and the Executive expressly agrees that this Agreement, as so amended, shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

7. Incorporation of Recitals. The Recitals set forth above are hereby incorporated as material terms of this Agreement.

8. Severability. The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, and this Agreement will be construed as if such invalid or unenforceable provision were omitted (but only to the extent that such provision cannot be appropriately reformed or modified).

9. Notices. Any notice which any party shall be required or shall desire to serve upon the other shall be in writing and shall be delivered personally or sent by registered or certified mail, postage prepaid, or sent by facsimile or prepaid overnight courier, to the parties at the addresses set forth below (or such other addresses as shall be specified by the parties by like notice):



	In the case of Executive to:	G Marc Baumann ______________________
	In the case of the Company to:	SP Plus Corporation 200 E. Randolph Street Suite 7700 Chicago, Illinois 60601 Attention: General Counsel

10. Applicable Law; Submission to Jurisdiction. This Agreement shall be construed in accordance with the laws and decisions of the State of Illinois in the same manner applicable to contracts made and to be performed entirely within the State of Illinois and without regard to the conflict of law provisions thereof. Executive and the Company agree to submit himself and itself, as applicable, to the non-exclusive general jurisdiction of any United States federal or Illinois state court sitting in Chicago, Illinois and appellate courts thereof, in any legal action or proceeding relating to this Agreement or Executive’s employment with the Company.

11. Nonalienation. The interests of the Executive under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Executive or the Executive's beneficiary.

12. Amendment. This Agreement may be amended or cancelled only by mutual agreement of the parties in writing without the consent of any other person.

13. Waiver of Breach. No waiver by any party hereto of a breach of any provision of this Agreement by any other party, or of compliance with any condition or provision of this Agreement to be performed by such other party, will operate or be construed as a waiver of any subsequent breach by such other party or any similar or dissimilar provisions and conditions at the same or any prior or subsequent time. The failure of any party hereto to take any action by reason of such breach will not deprive such party of the right to take action at any time while such breach continues.

14. Successors.

(a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(c) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean both the Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise.

15. Entire Agreement. Except as otherwise noted herein, this Agreement, constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, either oral or in writing, if any, between the parties, including the Executive’s employment agreement with the Company, relating to the subject matter hereof, provided, however, that this provision shall not be interpreted to supersede any separate equity agreements as set forth in Section 3 of this Agreement, including without limitation the Company’s Long Term Incentive Plan, Long Term Performance Share Program, and/or any awards, grants, or agreements relating to those plans.

16. Acknowledgement by Executive. The Executive has read and fully understands the terms and conditions set forth herein, has had time to reflect on and consider the benefits and consequences of entering into this Agreement and has had the opportunity to review the terms hereof with an attorney or other representative, if he so chooses. The Executive has executed and delivered this Agreement as his free and voluntary act, after having determined that the provisions contained herein are of a material benefit to him, and that the duties and obligations imposed on him hereunder are fair and reasonable and will not prevent him from earning a livelihood following the Date of Termination.

17. Compliance with Section 409A. Payments under Sections 5 and 6 shall be paid or provided only at the time of a termination of the Executive’s employment that constitutes a

“separation from service” within the meaning of Section 409A of the Internal Revenue Code (the “Code”); provided that if the Executive is a “specified employee” as such term is defined under Section 409A of the Code, any payments described in Section 5 or Section 6 shall be delayed for a period of six (6) months following the Executive’s separation from service to the extent and up to an amount necessary to ensure such payments are not subject to penalties and interest under Section 409A of the Code, and shall thereafter be paid in full for the duration set forth in Section 5 or Section 6.

18. Attorneys’ Fees. In the event of litigation in connection with or concerning the subject matter of this Agreement, the prevailing party shall be entitled to recover all costs and expenses of litigation incurred by it, including without limitation attorneys’ fees.

[Signatures on Following Page]

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement as of the day and year first written above.

SP PLUS CORPORATION

By: /s/ KAREN M GARRISON

Karen M. Garrison

Chairman of the Board of Directors

EXECUTIVE:

/s/ G MARC BAUMANN

G Marc Baumann

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, G Marc Baumann, certify that:

1. I have reviewed this Form 10-Q of SP Plus Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



	By:	/s/ G MARC BAUMANN
		G Marc Baumann
		Director, President and Chief Executive Officer
Date: August 1, 2019		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kristopher H. Roy, certify that:

1. I have reviewed this Form 10-Q of SP Plus Corporation;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



	By:	/s/ KRISTOPHER H. ROY
		Kristopher H. Roy
		Senior Vice President, Corporate Controller
		(Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer)
Date: August 1, 2019

Exhibit 32

Certification pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of SP Plus Corporation (the “Company”) for the quarterly period ending June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



	/s/ G MARC BAUMANN
	Name:	G Marc Baumann

	Title:	Director, President and Chief Executive Officer
		(Principal Executive Officer)
Date: August 1, 2019



	/s/ KRISTOPHER H. ROY
	Name:	Kristopher H. Roy

	Title:	Senior Vice President, Corporate Controller
		(Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer)
Date: August 1, 2019

This certification shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, or the Exchange Act, or otherwise subject to the liability of Section 18 of the Exchange Act. Such certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.